European shares dragged lower by oil stocks, Italian banks

MILAN: European shares fell on Monday, weighed down by a drop in crude oil prices, while Italian banks hit their lowest point since end-September on continued worries over a cash call at troubled lender Monte dei Paschi.

The pan-European STOXX Europe 600 index was down 0.8 percent by 0941 GMT. The oil & gas index and the regional banks' index were down 1.4 percent and 1.6 percent respectively, making them the two biggest sectoral fallers.

Shares in oil majors Total, Royal Dutch Shell and Eni fell between 1.4 and 2.3 percent, after oil prices added to Friday's steep losses as doubts re-emerged over the ability of big producing countries to agree output cuts at a planned meeting on Wednesday.

Banks, which had benefited from a rally in U.S. treasury yields following Donald Trump's victory in the race for the White House, were broadly as U.S. treasury yields pulled back from a 16 month highs.

Italian bank fell 3.1 percent, weighing on the broader Milan index, on continued doubts over Monte dei Paschi's ability to execute a 5 billion euros capital cash call.

Investors fear that a failure of the capital raising could heighten worries over the whole Italian banking system, adding to pessimism over political stability ahead of Sunday's referendum on constitutional reform.

"Uncertainty (on Monte Paschi) remains very high," said JCI Capital portfolio manager Alessandro Balsotti, who said that sentiment could brighten if the bank finds an anchor investor.

Monte dei Paschi was suspended for excessive volatility after a drop of more than 12 percent, while the country's strongest bank Intesa Sanpaolo lost 2.9 percent.

Elsewhere among financial services, Aberdeen Asset Management rose up 2.2 percent. Traders cited better-than-expected results, even though the British asset manager continued to suffer outflows.

But Man Group fell 4.6 percent after the stock was downgraded by Exane BNP Paribas to neutral, while London-listed lender CYBG rose 3 percent, helped by an upgrade o "buy" from Goldman Sachs.

Utilities, which had suffered from risings global bond yields becasuse that makes their dividends relatively less attractive, outperformed. The sector index was the only one to trade in positive territory, up 0.4 percent, with Endesa underpinned by a price target upgrade at Credit Suisse.