Italy stocks falter, German market higher on political waves

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Italy's stock market slid on Monday following the country's unclear election outcome, underperforming Europe's other main indices which pushed higher as investors reacted also to progress on Germany's political front and US President Donald Trump's controversial tariff plans.

Around 1000 GMT, the FTSE MIB stocks index in Milan was down 1.0 percent.

A surge for populist and far-right parties in Italy's weekend election could result in a hung parliament with a right-wing alliance likely to win the most votes but no majority.

The anti-establishment Five Star Movement and the far-right euro-sceptic League party were the big winners of the election, which laid bare widespread anger over immigration and frustration with mainstream politics.

Elsewhere in European trading, Germany's DAX 30 index rose 0.8 percent as investors breathed easier on news of the country's coalition agreement, while in Paris the CAC 40 won 0.4 percent.

Over the weekend, German Chancellor Angela Merkel vowed to work with the Social Democrats for the "good of Germany" as the centre-left party agreed to join her new coalition.

Outside the eurozone, London's benchmark FTSE 100 index climbed 0.4 percent compared with the closing level on Friday.

In foreign exchange, the euro and pound rose versus the dollar, which was down also against the yen.

Regarding Italy meanwhile, "the complexity of the Italian voting system makes it very difficult to establish what happens next and when, but neither of the anti-establishment... parties are an attractive option for markets or the euro", said Rebecca O'Keeffe, head of investment at Interactive Investor.

"Against this negative backdrop, investors can only be grateful that German coalition talks finally reached a conclusion, with Angela Merkel managing to hold on to her position as long-serving chancellor, albeit in a fragile alliance," she added.

- Trump tariffs -

Earlier on Monday, Asian markets fell again as the fallout from Trump's proposed steel and aluminium tariffs fanned fears of a global trade war.

Equities went into a tailspin last week after the tycoon unveiled his plans for the controversial levies. While US indices ended Friday on a slightly positive note, there is still the prospect of more volatility to come.

"Global equity markets are fragile, and investors are wary as the increasing rhetoric over the weekend on tariffs and a potential escalation of a full-blown trade war make it possible that things could get very ugly very quickly," said analyst O'Keeffe.

Trump has ramped up his rhetoric, tweeting that "Our friends and enemies have taken advantage of the US for many years", before adding "Sorry, it's time for a change!"

The move, part of the president's "America First" protectionist drive, was met with fury across the world with officials from Beijing to Brussels raising concerns.

"Uncertainty has lifted materially, folks, as countries react to the tariffs and a trade war and retaliatory measures loom as a real possibility unless President Trump finds a way to step back," said Greg McKenna, chief market strategist at AxiTrader.

- Key figures around 1000 GMT -

Milan - FTSE MIB: DOWN 1.0 percent at 21,692.8 points

London - FTSE 100: UP 0.4 percent at 7,098.02

Frankfurt - DAX 30: UP 0.8 percent at 12,008.5

Paris - CAC 40: UP 0.4 percent at 5,156.91

EURO STOXX 50: UP 0.3 percent at 3,333.47

Tokyo - Nikkei 225: DOWN 0.7 percent at 21,042.09 (close)

Hong Kong - Hang Seng: DOWN 2.3 percent at 29,886.39 (close)

Shanghai - Composite: UP 0.1 percent at 3,256.93 (close)

New York - DOW: DOWN 0.3 percent at 24,538.06 (close)

Euro/dollar: UP at $1.2321 from $1.2300 at 2200 GMT on Friday

Pound/dollar: UP at $1.3815 from $1.3792

Dollar/yen: DOWN at 105.56 yen from 105.73 yen

Oil - Brent North Sea: UP 41 cents at $64.78 per barrel

Oil - West Texas Intermediate: UP 48 cents at $61.73

© 2018 AFP

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