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Europe open: Brexit uncertainty holds back German stocks

By Alexander Bueso

Date: Monday 18 Mar 2019

Europe open: Brexit uncertainty holds back German stocks

(Sharecast News) - Stocks have begun the week on the front foot, but only just, ahead of another key week in the UK Parliament and of multiple central bank decisions around the world, including in the US and Europe.
It remained to be seen whether the DUP and hardline Brexiters would give the British Prime Minister their support for her withdrawal proposal or if she would be forced to go for a long extension to Article 50 - if Brussels allowed it.

Against that backdrop, the focus on the Continent, come Monday, was on a possible tie-up between two of Germany's largest private lenders, Deutsche Bank and Commerzbank, and news that debt ratings agency, Standard&Poor's, had marked-up Portuguese sovereign debt.

Another round of violent protests in the French capital, on Saturday, was also in the spotlight.

As of 1030 GMT, the benchmark Stoxx 600 was edging up by 0.08% to 381.40, alongside a 0.70% rise to 21,193.24 for the FTSE Mibtel, although the German Dax was off by 0.18% to 11,664.45.

Spain's Ibex 35 was also outperfoming, adding 0.52% to 9,391.0.

Boosting periphery stocks, on Friday, S&P raised its rating on Portugal's long-term sovereign debt by one notch to BBB.

In parallel, euro/dollar was adding 0.23% to 1.13510, while front month Brent crude futures were up by 0.03% to $67.17 a barrel on the ICE.

Reacting to the political uncertainty in the UK however, the pound was trading 0.43% lower against the single currency at 1.1685.

To take note of, during the previous session the S&P 500 had managed to clamber atop key technical resistance at the 2.815 point level.

Lenders's shares were pacing early gains on reports that Deutsche Bank and Commerzbank had received the 'green light' from the country's finance ministry to proceed with their merger despite the job cuts that might result.

According to reports, German finance minister, Olaf Scholz, told Deutsche Bank he would not stand in the way of a tie-up that some observers say might result in as many 30,000 layoffs.

The news pushed stock of Deutsche bank up by 4.05% and that of Commerzbank 7% higher, while the pan-European Stoxx 600 subindex of lenders' shares was gaining 1.23% to 146.20.

On the economic side of things, Eurostat reported an improvement in the euro area's seasonally-adjusted trade surplus from December's upwardly-revised €16.0bn (Preliminary: €15.6bn) to €17.0bn for January (consensus: €15.0bn), as exports bounded ahead of imports.

Still ahead for later in the session, European Central Bank vice-president, Luis de Guindos, was set to deliver a speech at 1315 GMT in Madrid, followed by another from ECB chief economist, Peter Praet, in Luxembourg, at 1510 GMT.


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