This Morning's Top Euro Stories
LONDON -- European equity markets are mixed but predominantly negative this Monday, with efforts by central banks to boost sentiment last week now seeing little traction. The banking sector is underperforming amid ongoing speculation that Barclays was simply the first of many big names to be implicated in the LIBOR-fixing scandal.
Meanwhile, the situation in the eurozone is looking slightly more upbeat after JPMorgan CEO Jamie Dimon said the region is moving toward a solution to its financial crisis. German chancellor Angela Merkel did say, however, that she hasn't softened her stance on the need for an oversight body if there is to be a new EU banking union.
Nordic indexes are seeing the strongest performances today, most managing to hold in the green, while the Spanish IBEX (INDEX: ^IBEX) is the worst-performing benchmark index, down 1.4%.
The banking sector is under pressure as investigations into the LIBOR scandal look set to expand in both the U.S. and the U.K. It is now expected that criminal charges could be brought against those traders involved in LIBOR-fixing in the U.S., while a new investigation is being opened this week in the U.K.
Within the sector, Spanish names are leading losses as news emerged that the country's 100 billion euro bailout will come under a 30-year term at 2.5% interest. The European Commission also said that senior bondholders will not be forced to take losses in plans to overhaul the country's banking industry. BBVA is one of the worst-performing majors, down 2.5%.
The one exception to this banking sector weakness is Swedish lender SEB (NASDAQOTH: SWDBY.PK), which has rocketed almost 8% higher today following better-than-expected earnings results. The company reported operating profit climbing 14%, while net income fell less than expected, thanks to strong domestic demand. Income from interest payments climbed 7%.
Elsewhere, Alcatel-Lucent (NYS: ALU) is under pressure, falling 3.7% after it was revealed that a problem with the company's equipment was the cause of a telecommunications blackout in France. A spokesman for the company said the problem occurred after an overload following a software update on the equipment last weekend, but he was quick to deny that Alcatel's equipment had anything to do with a similar outage suffered by O2 customers in the U.K. last week.
French carmaker Peugeot (NASDAQOTH: PEUGY.PK) has slipped 3.4% in Paris after president Hollande said last week that the company's planned job cuts will not be tolerated. Finance minister Pierre Moscovici said the government was looking for solutions to help prop up the carmaker and limit job losses, suggesting that labor costs are not the company's main problem.
Meanwhile, according to data by Bloomberg, Peugeot's Credit Default Swaps -- securities used as a hedge against the company defaulting -- imply that the company currently has a 51% chance of defaulting after they jumped 50 basis points to an all-time high of 8%.
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