(Bloomberg) -- European stocks erased gains as Germany’s subdued business outlook added to concerns about the health of the region’s economy. Investors continued to monitor dealmaking in the banking sector, with UniCredit SpA eying a new acquisition target.
The Stoxx Europe 600 Index was little changed at the close in London. UniCredit fell after launching a $10.6 billion all-share offer for domestic rival Banco BPM, opening a second major takeover front, with Chief Executive Officer Andrea Orcel also pursuing Commerzbank AG. Shares at the German bank dropped, while Banco BPM rallied.
While retail and energy stocks were lagging behind the benchmark index, miners were among the biggest gainers, as iron ore prices benefited from a weaker dollar. The greenback fell following US President-elect Donald Trump’s choice as his Treasury Secretary of Scott Bessent, who is expected to pursue more hawkish fiscal policies, reining in spending, and take a measured approach to trade tariffs.
“Trump’s pick of Bessent as the Treasury secretary supports our view that concerns of massive fiscal expansion under Trump are exaggerated,” said Mohit Kumar, chief European strategist at Jefferies.
European stocks might see some support in the short term, with about 10% of Stoxx 600 components currently at oversold levels, a position that has triggered a period of strong performance for the region in the past.
Elsewhere, luxury stocks were among the best performers on Monday, as the sector was lifted by news that China is expanding its visa-waiver program, raising hopes for increased travel.
European Central Bank’s speakers reinforced the sentiment that more interest rate cuts are coming soon, with the Governing Council member Martins Kazaks urging for the next rate reduction to happen in December and Chief Economist Philip Lane saying the monetary policy is bound to become less restrictive in 2025.
For more on equity markets:
- The Year’s Gains Can Hold Even After Recent Wobble: Taking Stock
- M&A Watch Europe: UniCredit Bids for Banco BPM; ITV, Anglo, Atos
- US Stock Futures Rise
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--With assistance from Jan-Patrick Barnert.
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