The pan-European STOXX 600 index fell 0.1% by 0910 GMT weighed down by a 0.7% drop in the bank-heavy Italian index.
Italy’s deputy prime minister Matteo Salvini’s comments from Tuesday have raised concerns about the country’s high spending, taking a hit on Italian banks.
‘It’s not the first time the Italians have pushed the boundaries with EU fiscal rules, it is just this time his rhetoric has come at a time when the markets are probably more sensitive to this commentary than normal,’ said John Woolfitt at Atlantic Markets.
The European banks lost 0.3%, also weighed down by some disappointing earnings. Raiffeisen Bank International (RBI) and Dutch bank ABN Amro both missed profit expectations. French bank Credit Agricole’s first-quarter net profits dropped after two one-off events offset gains in profitability at some of its businesses.
Bucking the trend was British bank CYBG Plc., which rose 4% after posting a first-half profit.
European markets witnessed a strong rebound from two-month lows on Tuesday after U.S. President Donald Trump adopted a softer tone on trade following a recent flare-up in tensions between Beijing and Washington with both sides slapping duties on each others’ imports.
Autos, which were among the leading gainers a day earlier, slipped 1.1%, weighed down by shares of Renault and Volkswagen.
Renault’s Japanese partner Nissan issued a bleak earnings outlook.
In an earnings-heavy day for British companies, London’s FTSE 100 outperformed its peers. The blue-chip index was helped by Compass Group Plc. shares after the caterer
raised its full-year revenue outlook.
E.ON tumbled more than 5%, among the biggest losers, as Goldman Sachs downgraded the energy company’s stock. Its shares also traded ex-dividend. On the other hand, its rival
RWE rose after beating quarter profit expectations.
Meanwhile, latest data showing euro zone economy accelerated sequentially first quarter of 2019, helped by a rebound in the biggest economy Germany, failed to lift investors’ spirits.
‘While the recession in the German industry may have started to bottom out, businesses in the export-orientated sector barely added anything to growth in the first-quarter,’ said Florian Hense, an economist at Berenberg.
‘The German economy is not out of the woods, yet.’