European stocks slipped yesterday as investors cashed in their recent gains on defensive shares, but technical support helped the market maintain its bullish tone and stay near recent multi-year highs.
The eurozone’s Euro STOXX 50 index dropped 0.4 per cent to 2,773.16 points, retreating from a near two-year high but finding support at an upwards trend line from lows hit on April 18.
The index has risen nearly 10 per cent in the last three weeks and hit its highest point since July 2011 on Wednesday.
“It’s natural to have a pullback after the gains we’ve seen. The fact that we found support to come off the lows suggests that there’s still plenty of appetite in the market,” said Matt Basi, sales trader at CMC Markets.
“It’s a bull market, and people are quite happy to buy dips.”
Defensive utility stocks fell 0.5 per cent, the biggest sectoral faller on the STOXX Europe 600, led lower by a 5.1 per cent fall in Italian gas transport company Snam after main shareholder Eni launched a placement at a discount to Wednesday’s closing price.
Italy’s blue chips lagged regional peers, down one per cent, with Banca Popolare di Milano the top faller, slumping 8.9 per cent on concerns that a plan to transform the cooperative bank into a joint-stock company could be delayed or even dropped.
Banks took nearly 100 points off the FTSE MIB, over half of its drop, as data showed bad loans at Italian banks grew in March at their highest annual rate since December 2011.
Outside Italy, UK stocks joined the day’s top movers, with B Sky B sliding 6.2 per cent on plans of rival BT to challenge the broadcaster by offering free British football matches to customers.
On the other hand, Experian, the biggest credit data company in the world, surged 6.4 per cent after raising their dividend, announcing a share buyback and offering optimistic guidance for the coming year as they released annual results.
They were the top movers on the pan-European FTSEurofirst, which closed flat at 1,229.15 to stay near five-year highs, although it includes stocks from the Austrian, Nordic and Swiss markets, which were all shut for a holiday.
The gains in European shares in recent weeks have come on the back of continued monetary easing from central banks globally, including the European Central Bank’s cutting of interest rates to record lows.
The German DAX set fresh record highs, outperforming peers to eke out a 0.2 per cent gain.
“The DAX is being supported by stronger German data, and it’s holding above the 8,200-level, which indicates very strong upward momentum for the German equity market,” Myrto Sokou, senior research analyst at Sucden Financial, said. (Reuters)