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European stocks turn red amid Italian political worries

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European shares are lower Friday afternoon as Italian stocks weigh amid concerns over the plans and policies of the likely future coalition Government. Oil-related stocks, meanwhile, are a little mixed, as investors take a breather following a positive week for the sector on surging oil prices.

By 1330 BST, the EUROSTOXX 600 was 0.21% lower, while the EUROSTOXX 50 edged down 0.32%. Regional bourses were also in negative territory. The German DAX was off 0.13%, the French CAC was 0.03% in the red and the Spanish IBEX lost 0.67%.

Italian politics

As it has for much of the week, Italian politics is playing a notable role in the direction of Italian and European stocks, Friday.

Over two months after the Italian election failed to find a single most popular party among voters, 5-Star and the League party are in advanced talks to form a coalition Government.

While the formation of a Government would help remove some uncertainty, the policies of the potential partnership could also knock investor confidence. Policies the two parties are said to agree upon include requesting the ECB to forgive some €250 billion of debt.

In addition, the party’s possible energy policies could hurt some energy firms, including state-owned Enel.

Italian banks are also lower amid the Italian political backdrop. Intesa Sanpaolo, UniCredit and Monti dei Paschi are all trading between 2%-and-3% in negative territory.

Oil price impact

The rising price of oil has also played its part this week. Oil-related stocks have proved positive for much of the week as the price of oil hit $80 per barrel, Thursday.

Rising tensions over the supply of the precious commodity from Venezuela and Iran amid likely tough US sanctions could even push prices towards the $100 per barrel level, according to JP Morgan analysts.

  • Total shares are 1.08% higher at €54.70.
  • Royal Dutch Shell shares are 0.55% in the red at £2,790.
  • Eni shares are a touch higher at €16.61.

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