European shares hit two-week low as banks, Gemalto tumble

European shares hit a two-week low on Wednesday, extending losses from the previous session, weighed down by weaker banks and a plunge in security services firm Gemalto following a profit warning. The pan-European STOXX 600 index ended down 0.4 percent, little affected by an attack in London near the British parliament which left several people injured.
The index fell as much as 1 percent to its lowest since March 9 as global markets were hit by worries that US President Donald Trump could struggle to deliver on his reflationary economic policies. These doubts hit bank stocks with their sectoral index falling 0.8 percent. "Bank stocks .. were epitomising the reflation trade with higher interest rates and higher inflation with Trump-led spending," Jasper Lawler, senior market analyst at London Capital Group, said. "As the market's been questioning itself, or at least unwinding ... that's been a sector that's been hit the most." Dutch lender ING Groep was among the biggest fallers, down 4 percent after disclosing a criminal investigation which could result in significant fines.
"It is at this stage hard to assess ING's exact role in the alleged wrongdoing, let alone estimate the size of any penalties the group might face," analysts at KBC Securities said in a note. "Penalties by US authorities on similar criminal proceedings have been very high in the past and we therefore expect investors to react nervously to ING's involvement in this case."
Raiffeisen Bank also dropped 5.6 percent after Immigon completed the sale of 9.92 million shares in the Austrian bank. Akzo Nobel fell 1 percent, as shareholders piled on pressure to open talks with US rival PPG Industries after the Dutch paint maker rejected a revised 22.7 billion euro take-over offer. The biggest individual faller was Gemalto, which plunged 17 percent, its second biggest one-day loss on record.
The Dutch digital security services firm plummeted after cutting its profit forecasts, blaming a weak US payments business. Transactions system firm Ingenico also fell 3.8 percent. Individual moves higher were relatively muted, though safe-haven precious metals miners Randgold Resources and Polymetal International were in demand, rising 1.4 percent and 2.6 percent respectively. The broad risk-off sentiment likewise helped defensive stocks such as Portuguese electric utility EDP and Spain's Endesa, which were among top gainers. Europe's utilities sector rose 0.3 percent.