The Milan bourse suffered
again Tuesday amid fresh turmoil among banking stocks and faint
echoes of the financial and monetary crisis of 2011.
The blue-chip FTSE-Mib index closed 3.21% down at 15,913
points.
Banking losers included Carige (-10%), Ubi, Banco Popolare
and Bpm (-8%), Unicredit (-7%), and Intesa (-6%).
Fears of a slowdown in global growth, particularly in
China, the United States and the emerging economies, were said
to be one of the factors behind the stock market's renewed
weakness.
The slumping price of oil, fuelling fears that inflation
targets of 2% will not be met, was also said to be a factor
behind the new losses.
But the woes of Italian banks, including their high ratio
of non-performing loans (NPLs), were seen as the greatest drag
on trading for the umpteenth session despite government plans to
deal with the problem via a bad bank.
The turbulence followed Monday's massive losses on the
international money markets when the FTSE Mib closed fully 4.69%
down.
The spread between Italy's 10-year BTP State bond and the
German equivalent dropped back to 144 basis points by the close
Tuesday after briefly going over the 150-points threshold
earlier in the day.
On Monday the spread, an important yardstick of investor
confidence and of Italy's borrowing costs, closed at 146 basis
points, the highest level since July 2015.
Greece's spread closed above 1,000 euros, its highest
since August.
Other European stock markets also suffered big losses with
Athens losing 2.8%, Madrid 2.32%, Paris 1.6%, Frankfurt 1.1%
and London 1.0%.
In all, European bourses saw another 130 billion euros go
up in smoke Tuesday - about the same as Monday - as the Stoxx
600 index lost 1.48%.
Milan alone lost 13 billion.
The high volatility of banking stocks "is not led by
Italian banks or by other large banks," European Union sources
said Tuesday.
Banks and growth will be the focus of Thursday's Eurogroup
meeting, they said.
The spectre of a crisis on the stock and FOREX markets like
2011 is "hovering but we're not there yet," LUISS University
economist Marcello Messori told ANSA Tuesday.
"Any economist would be wondering if we have returned to the
2011 financial crisis with a plunge of the banking sector and
tension on spreads...but we're not there, or at least not yet,"
said Messori, director of LUISS's prestigious school of European
economics.
Warding off a repetition of such a crisis, in Messori's
view, are "more robust" European institutions, the European
Central Bank's response with non-conventional monetary policies,
and an EU budget policy that is "no longer recessionary but
moderately expansionist".
However, there are "objective data" that are troubling,
Messori told ANSA.
"Compared to a year ago the macroeconomic picture is
worsening, not only in the emerging countries but also in China
and the US where the rate of growth is ever more fragile.
"Europe and Italy still have too modest growth rates. In
this situation a global growth engine is missing".
If, on the one hand there is a need to relaunch aggregate
demand in Europe and bolster productivity, Messori said, on the
other hand banking woes persist.
"In a certain respect an issue highlighted repeatedly by
the International Monetary Fund is coming home to roost, that
the European banking sector has not fully cleaned up the
after-effects of the 2007-2009 crisis," he said.
In Italy, then, there was a major problem of problematic
loans, he said.
This problems had been "exacerbated," Messori said, by new
EU rules which have backdated more rigid criteria to older
loans, creating tension.
"It is crucial," he said, "that we at least have a common
guarantee on deposits, and we need very strong policy
initiatives to avoid a gradual return to 2011".
Premier Matteo Renzi said in his e-news Tuesday that "the
financial world is struggling.
"Italy is not the epicentre of the crisis, which
unfortunately has many causes: oil, geopolitical tensions,
ex-emerging countries".
But he said that the banking sector "must transform and
consolidate itself", including via mergers.
The government will encourage this process with upcoming
moves, he said.
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