- Cypriot conservatives win by comfortable margin
- RBS: Risk of a hung parliament in Italy is high
- Periphery bond yields decline
FTSE Mibtel 30: 1.93%
Ibex 35: 1.57%
Stoxx 600: 0.37%
European stocks began the week encouraged by a solid victory for Cypriot conservatives over the weekend, which sent the German benchmark Dax index hurtling back towards five year highs, although not yet above.
Conservative leader Nicos Anastasiades was elected as the seventh president of Cyprus after winning 57.5% of the votes. Anastasiades won by the widest margin in 30 years.
Also helping sentiment were the constructive remarks from some Fed officials on Friday evening.
Markets, however, are now bracing for the first exit polls from Italy's general and regional elections. It is thought that these will determine whether the country sticks - or not - to the necessary reform drive. Yet after Prime Minister Silvio Berlusconi and maverick politician Beppe Grillo's rise in the polls the result is now somewhat less certain.
In the opinion of Alberto Gallo at RBS, at a probability of 32% "(...) the risk of a hung parliament in Italy where [Bersani's] PD+Monti win the lower house but not the senate is high." A hung parliament would be a strong negative for the market, as the senate can virtually block any key laws passed in the lower house.
"Even a winning PD+Monti coalition could end up running the senate by just a handful of seats and will likely depend on SEL, a far-left ally of the PD which opposes Monti and certain reforms. Both a hung parliament and a weak majority could generate a period of political instability, possibly resulting in new elections over the coming months," he explained.
The results will start coming out at 14:00 GMT today, first for the senate and then for the lower house, although the screening process will last until late at night.
Neutral company news flow
Dutch parcel delivery business Post on Monday morning reported fourth-quarter earnings before interest and taxes of €219m, far ahead of consensus forecast.
German engineering giant Siemens is looking to accelerate its exit from its 50% stake in its telecom equipment joint venture with the Finnish phone maker Nokia, the Financial Times reports.
French media group Vivendi is likely to close a deal in the coming weeks to sell a stake in Brazilian telecoms unit GVT, according to press reports.
From a sector stand-point the best performance on the DJ Stoxx 600 was to be seen in the following industrial groups: Automobiles&Parts (2.37%), Technology (1.35%) and Construction&Materials (1.23%).
Italian trade deficit declines
Italy's non-EU trade deficit reached €2.3bn in January, after €5.2bn in the month before.
Spanish producer prices rose by 1.1% month-on-month in January, after a flat reading for December.
Large rise in crude futures
The euro/dollar is now higher by 0.82% to the 1.3300 dollar
Front month Brent crude futures are now rising by 1.255 dollars to the 115.55 dollar per barrel mark on the ICE.