European stocks halt 2-day advance

London - European stocks fell, following their first monthly gain in three, ahead of Sunday’s Italian referendum.

The Stoxx Europe 600 Index fell 0.5% at 11:10 in London. While the benchmark rose with energy shares on the
Organisation of the Petroleum Exporting Countries (Opec) agreement yesterday, it’s still on track for a weekly decline.

Italy’s vote on constitutional reform is among a number of political and economic events traders are preparing for in December.

Also due are data on American payrolls tomorrow and central-bank meetings in Europe and the US later this month.
 
"There is a great deal of trepidation among investors ahead of the vote," said Ken Odeluga, a market analyst at brokerage firm City Index in London.

"Even though we got a bounce yesterday after the Opec agreement, there is still a huge amount of interest on the bearish side and shorts in place.

It’s the focus for Europe, and we are going to see more selling out of equities if we get a negative outcome. There is certainly room for more volatility."

Traders assessing what a ‘no’ vote on Sunday means for Italy’s political stability and its banking crisis aren’t taking any chances.

Following surprise victories for the Brexit campaign and for Donald Trump in the US election, they are paying the most in more than two years to hedge against swings in the FTSE MIB Index relative to the Euro Stoxx 50 Index.

The Italian benchmark was little changed today, following a monthly decline.

Exporters were among the biggest contributors to declines in the Stoxx 600 on Thursday, while miners and oil-related shares advanced. HSBC Holdings, Unilever and British American Tobacco fell at least 2%.
A gauge tracking energy stocks headed for its biggest two-day rally since September.

The Stoxx 600 climbed 0.9% in November on speculation Trump will increase fiscal spending, spurring economic growth.

The respite hasn’t been enough to stave off the first annual decline for the benchmark since the peak of the sovereign-debt crisis in 2011. It’s down 7% this year.

Among stocks active on corporate news:

Banco Popular Espanol jumped 8.7% after a report the lender is weighing a potential merger with another bank and has approached Banco Bilbao Vizcaya Argentaria, among others.

Daily Mail and General Trust rose 5.6% after it reported 2016 revenue that beat estimates.