Today's Edition
(REUTERS)
European shares dropped on Monday, with French equities being the hardest hit after the country's new Prime Minister, Sebastien Lecornu, unexpectedly resigned.
The pan-European STOXX 600 dropped 0.2% to 569.4 points by 0946 GMT. The index briefly hit an intraday record high on Monday after climbing more than 2.8% last week.
French stocks slid 1.6%, on pace for its biggest one-day drop since August, after Lecornu resigned just hours after appointing his new cabinet.
"It's just one government after another ... this is the major problem for French assets, but it has a spillover effect for the rest of Europe," said Chris Beauchamp, Chief Market Analyst at IG Group.
Beauchamp added, "It certainly makes people wary about European assets at this point because of the uncertainty and the spillover effects that go from France just being unable to find its way out of this malaise."
Lecornu had appointed his ministers on Sunday, and the cabinet was set to hold its first meeting on Monday afternoon.
Eurozone banks shed 1.6%, with French lenders Societe Generale, Credit Agricole and BNP Paribas down between 4.3% and 6.3%.
Yields on French debt spiked, and local mid-cap stocks also dropped 2.3%, poised to snap a six-day winning streak if the losses hold.
French blue-chips have lagged Europe so far this year, up over 7% compared to double-digit gains seen in most developed country peers as political uncertainty weighed heavily on local assets.
On the bright side, oil and gas gained 1% tracking higher oil prices after OPEC+'s planned production increase for November was more modest than expected.
Avanza Bank gained 4% after brokerage Kepler Cheuvreux upgraded its rating on the Swedish financial group to "hold" from "reduce".
Wall Street brokerage J.P. Morgan upgraded its stance on the euro zone to "overweight" from "neutral", noting that equities in the region have become more attractive after several months of underperformance and policy support.
Among other moving stocks, SEB slid 20.3% after the French kitchenware maker cut its annual sales and profit forecast.
Mondi dropped 15.2% after the British packaging and paper firm said its core profit growth slowed in the third quarter due to weak demand and lower prices.
The UK's Aston Martin lost 6% after the luxury carmaker warned of a full-year loss that would be bigger than market consensus.
