Paris: European stocks were down on Monday morning, falling for a third straight session dragged lower by banking and oil stocks, while volumes were expected to be thin with UK markets closed for a holiday.
Porsche was among the biggest losers, falling 6% after the luxury automaker confirmed media reports that it received a €700 million ($979.7 million) loan to help with its finances.
At 2:00pm, the FTSEurofirst 300 index of top European shares was down 0.6% at 850.89 points, after edging higher in the first minutes of trading.
The index, up 2.2% on the year, has risen 32% since reaching a record low in early March, but the sharp rally started to lose steam last week, dented by growing worries over mounting government debt.
“The recent optimism on the markets has been excessive,” Joost van Leenders, strategist at Fortis Investments wrote in a note. “The deleveraging process is far from over and governments are facing rising deficits.”
On the macro side, weaker-than-expected readings of the German business sector suggested that the nation’s firms continue to struggle.
The euro fell as low as $1.3959, according to Reuters data, hitting the day’s low. It traded at $1.3985 before the data was released.
Investors were also seen trading cautiously after North Korea said it had successfully conducted a nuclear test.
Around Europe, Germany’s DAX index was down 1.4% and France’s CAC 40 was down 1.2%.
French building material group Saint-Gobain lost 2.9%. Two bankers told Reuters that the company was seeking a 2 billion euro refinancing loan. No one at Saint-Gobain was available for comment.
Germany’s Arcandor shed 20% after its CEO Karl-Gerhard Eick and Chairman Friedrich-Carl Janssen reiterated the need for state aid to ensure the survival of the company in interviews with Frankfurter Allgemeine Sonntagszeitung and Der Spiegel.
US markets were also closed on Monday for Memorial Day.
Wall Street dropped for a fourth consecutive session on Friday on persistent worries about the budget deficit, with Treasuries and the dollar losing ground.
European shares ended lower on Friday, further cooling a rally that has added a third to stock prices in the past 10 weeks, as defensives and Swiss stocks weighed.