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Europe: Stocks dips to 3-week low as Turkey dents lenders
[LONDON] Banks dragged European shares down on Monday as the Turkish currency crisis shook investor confidence in lenders exposed to the country, while pharmaceuticals group Bayer sank 11 per cent after its subsidiary Monsanto lost a key lawsuit.
The pan-European SToxx 600 fell 0.2 per cent and closed at a three-week low, with Germany's DAX down 0.4 per cent as pharmaceuticals group Bayer weighed.
Bayer was the worst performer, sinking 10.8 per cent after Monsanto, the US agriculture giant it acquired in June, was ordered to pay damages in a lawsuit alleging its glyphosate weedkiller caused a man's cancer.
"With several other similar cases up for hearing, we expect this to be an overhang on the stock," said Goldman Sachs analysts.
Bayer's shares were set for their biggest one-day fall in more than nine years.
Euro zone bank stocks fell 1.8 per cent and touched levels not seen since December 2016 during trading.
Turkish-exposed banks BBVA, Unicredit, and BNP Paribas fell 3.2 per cent, 2.6 per cent and 1.1 per cent.
A growing economic crisis in Turkey took the lira to a new record low of 7.24 to the dollar overnight and has spurred selling across global markets, with some contagion to other emerging markets.
"The fears that all this will end in tears eventually are strong, more so with populist economic thinking at the helm, from the US to Turkey, and the UK to Italy," said Societe Generale analysts.
The lira pulled back from its record low after the central bank pledged to provide liquidity and cut lira and foreign currency reserve requirements for Turkish banks.
Deutsche Bank shares fell 2 per cent after Bank of America Merrill Lynch downgraded the stock to "underperform". Ingenico shares also suffered a 1.7 per cent fall after a BAML downgrade to "underperform".
Air France KLM shares tumbled 4.1 per cent after its biggest pilots' union said over the weekend further strikes were possible if pay talks with management did not resume.
Travel and leisure stocks fell 0.5 per cent as Air France weighed and the deepening crisis in Turkey sapped investors' appetite for companies involved in tourism in the country.
Shares in asset manager GAM fell 3.7 per cent after it said it would liquidate nine funds whose trading it halted last month, after suspending the investment director who ran them.