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European shares slide amid Italian budget announcement

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European shares are in the red Friday, led lower by Italian stocks after its Government announced a budget deficit target that could put it at odds with the European Union’s fiscal rules. The news weighed heavily on the broader banking sector, with indices sliding, despite some pockets of brighter company news.

By 1410 BST, the EUROSTOXX 600 was off 0.76%, while the EUROSTOXX 50 was down 1.48%. Meanwhile, regional bourses were all negative too. The German DAC lost 1.68%, the French CAC fell 0.90%, the Spanish IBEX was 1.56% lower, while the Italian MIB slumped 4.07%.

Italian budgetary concerns

After much debate, the Italian government Thursday announced its new budget deficit target would be 2.4% of GDP. The figure is at odds with the country’s finance minister’s calls for a 1.6% target and, if it fails to balance its book as expected, the decision could put the country in a tough position as the EU’s deficit to GDP limit is 3%.

However, the Governing coalition’s two leading parties are keen to increase spending to support infrastructure investment, social welfare plans and tax cuts.

Italian banks continued the declines from Thursday:

  • UniCredit shares sank 8.20% to €12.76.
  • Intesa Sanpaolo shares slumped 7.95% to €2.21.
  • Banco BPM shares lost 8.92% to trade at €2.14.

Stock movers

Against that tough backdrop, which also extended to other European bank stocks, there were some other movers of note.

Ryanair shares fell 0.38% to €13.10 after the budget Irish airline increased its flight cancellations from 190 to 250. The change was a result of additional strike action form some of its German-based pilots.

Ryanair apologised to customers for the inconvenience and called the action ‘unnecessary’.

Thyssenkrupp shares were also in the red Friday. However, that was a reversal of the strong upward tone Thursday, when the German industrials group announced plans to split the firm into to, separately listed companies

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