Europe: Shares pull back from 11-month high, oil stocks soar

[MILAN] Europe retreated from an 11-month high on Monday with falls in shares such as Swedish biometric technology firm Fingerprint and Swiss drugmaker Lonza outweighing a rally in oil stocks which reached near 17-month highs.

Fingerprint, the biggest faller in the pan-European Stoxx 600, extended recent losses and ended 9.5 per cent lower after hitting a 14-month low earlier in the day due to a sharp cut in its revenue forecast last week.

Shares in Swiss pharmaceutical company Lonza fell 5.3 per cent after it said it was in advanced talks to buy US drugs capsule maker Capsugel. Sources earlier told Reuters the deal could be worth more than US$5 billion.

Baader Bank analyst Laura Lopez Pineda said the deal made strategic sense, but worries it may need a capital increase to finance it may weigh on Lonza's shares. The fall dragged down Europe's Stoxx Healthcare index, which closed 0.9 per cent lower.

The Stoxx Europe 600 index finished 0.5 per cent lower after hitting its highest level in around 11 months earlier in the session. It remains down more than 3 per cent so far this year.

Among the top losers was precious metal miner Polymetal. It fell 4.7 per cent, tracking a drop in gold to a 10-month low on concerns that a possible US rate hike this week could curb demand.

But losses in the broader market were limited by a rally in crude oil. Crude prices climbed to their highest since mid-2015 after the Organisation of Petroleum Exporting Countries and non-Opec producers reached their first deal since 2001 to jointly reduce output.

"Although the crude oil rally has already started at the end of last month when the Opec first announced the deal, I think there is plenty of fuel left in this rally," FOREX.com analyst Fawad Razaqzada said.

The Stoxx Oil & Gas index closed 1.7 per cent firmer after hitting its highest since July 2015. Oil stocks such as Tullow Oil, Petrofac and Eni were among the top Stoxx gainers, rising 3.7 to 5.2 per cent.

Italy's FTSE MIB index closed 0.4 per cent higher after rising more than 1 per cent earlier in the session as Foreign Minister Paolo Gentiloni was tasked to form a new government.

However, Italian banks reversed their early gains to finish 0.9 per cent lower, driven by ongoing concerns about Monte dei Paschi's plan to raise 5 billion euros (S$7.5 billion) on the market this year.

"His (Gentiloni's) first problem remains the fate of Monte dei Paschi and the prospect that the bank could well need bailing out," said Michael Hewson, analyst at CMC Markets.

UniCredit, the country's biggest bank, closed 3 per cent lower following lingering concerns about the broader Italian banking sector. The stock had rallied in the morning session after a deal to sell asset manager Pioneer to France's Amundi for 3.5 billion euros.

Amundi shares rose over 5.4 per cent to a record high.

REUTERS