- Banking stocks fall on ECB stress test
- Investors weigh mixed manufacturing data
- Analysts speculate on UK interest rate rise
FTSE 100: -0.69%
CAC 40: -1.39%
FTSE MIB: -2.63%
IBEX 35: -1.96%
Stoxx 600: -1.34%
Banks led European stocks lower after the bloc's central bank collected its first set of data for its review of lenders.
The European Central Bank (ECB) is reviewing the Eurozone's largest banks to see if they can withstand a sharp economic downturn.
Banks will have to show a ratio of 8% in core Tier 1 capital relative to their risk-adjusted assets in the baseline scenario, and 5.5% in the adverse scenario.
"Preparations for the stress test are well under way and we are confident that, in close coordination with the European Banking Authority, the outcome will be transparent and credible, boosting the European banking sector," Vítor Constâncio, Vice President of the European Central Bank, said in a statement Monday.
European banks were among the worst performers on the Stoxx 600, down 2.67% at 16:50, following the news.
The Eurozone manufacturing purchasing managers' index (PMI) rose to 54 in January from 53.9 the prior month, beating analysts' predictions of 53.9 and the 50 level that signals expansion. Growth was driven by Germany, which offset a fall in emerging markets.
Chinese manufacturing activity eased in January, fuelling concerns of slowdown in the world's second largest economy. The PMI dropped to 50.5 in January from 51 a month earlier, in line with market expectations.
Manufacturing also eased in the UK with the PMI falling to 56.7 last month from 57.2 in December, missing the 57.3 consensus forecast.
In the US, the Institute for Supply Management's manufacturing sector survey for the month of January came in at 51.3, following a reading of 57 a month before (consensus: 56).
BoE may lift interest rates
BoE Governor Mark Carney is expected to raise interest rates before the European Central Bank (ECB) and the US Federal Reserve, Bloomberg reported citing economists at Citigroup and Nomura.
The analysts said the strongest growth since 2007 will prompt the UK's central bank to lift its record low benchmark rate of 0.5% as early as this year.
Morgan Stanley sees the BoE lifting rates in the second quarter of 2015 and the Fed increasing in 2016.
Sandvik AB, the world's biggest maker of metal-cutting tools, edged lower after reporting a 72% fall in operating profit of 590m kroner in the final three months of 2013.
Colruyt SA tumbled after the Belgian discount food retailer said it will report a smaller profit for the current financial year, due to slower sales growth and a loss in market share.
Randgold Resources rallied after saying gold production increased 15% in 2013, and costs fell 3% to $715 per ounce.
Lloyds Banking Group slumped after saying it set aside £1.8bn in the fourth quarter to cover the cost of compensating customers for mis-sold payment protection insurance.
Ryanair advanced after the airline said price weakness has eased and bookings in the first quarter of 2015 are already significantly higher than a year ago.
Travel retailer Dufry AG slipped as Citigroup recommended selling the shares.
The euro rose 0.32% to $1.3529.
Brent crude futures dropped $0.824 to $105.530 per barrel, according to the ICE.