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Jul 25, 2016

European Markets at Close Report, by CNBC on July 25, 2016: Europe Stocks Pare Gains to Close Mixed as Oil Prices Fall

Alexandra Gibbs, Arjun Kharpal, Katy Barnato

European markets pared gains on Monday to close mixed, as Wall Street traded lower and oil prices fell.

The German DAX index pare gains to close around 0.4 percent higher. It received an early boost after Germany's Ifo business climate index fell slightly to 108.3 in July, but came in ahead of expectations.

The French CAC 40 index closed roughly flat and the U.K.'s FTSE 100 was 0.4 percent down. The latter was harder hit because of the heavy weighting of commodity stocks in the index. These were pressured lower by Monday's downward ride in Brent and U.S. WTI crude futures.

European stock indexes

FTSE FTSE 6699.19 -31.29 -0.46% 489742209
DAX DAX 10177.74 30.28 0.30% 42557123
CAC CAC 4378.62 -2.48 -0.06% 58284463
IBEX 35 IBEX 35 Idx 8563.70 -36.20 -0.42% 128168258
Brent futures for September slid steadily below $43 per barrel, while U.S. WTI fell below $43.30. This was on ongoing fears of a global glut in supply.
Poor performing stocks on Monday included Tullow Oil, which traded 4.7 percent lower and Randgold Resources, which traded 4.4 percent lower. The latter is listed on the FTSE 100.
U.S. indexes opened lower on Monday after four consecutive weeks of gains.
Shares of U.K. bookmaker William Hill surged as much as 11 percent after online gambling group 888 Holdings and casino operator Rank Group said they were joining forces to make a bid for the company. William Hill said no formal offer has been presented. Shares have since pared, but it remained a top performer on the FTSE 250 index of mid-cap companies.
Earnings continued to come thick and fast. Swiss private bank Julius Baer said its assets under management rose 4 percent in the first half of the year, sending shares to the top of the SMI index.

Dutch health care company Philips was trading higher after it reported adjusted earnings before interest, tax and amortization of 544 million euros ($597 million) in the second quarter for 2016, up from the 501 million euros in the same period last year.
Elsewhere, network equipment maker Ericsson announced on Monday that Chief Executive Hans Vestberg has stepped down and the search for his replacement has begun. Investors reacted positively to the news with shares up over 5 percent at one point, before paring some gains.

Ryanair soars

Shares of Ryanair rallied over 5 percent after the budget airline said net second-quarter profit was up 4 percent. Ryanair said Brexit would lead to downward pressure on fares until the end of 2017 at least, but the carrier stuck to its earnings target for the year. this contrasted with more negative outlooks from rivals.
The travel sector has been under pressure recently amid a number of terrorist incidents in Europe, as well as the continued fallout from Brexit. Last week, easyJet said it could not give any profit guidance, for that reason.
Shares of Air France-KLM shares were sharply lower after unions said they would maintain their call for strikes this week.

Central banks watched

Investors will eye two leading central banks this week, as each institution meets a month after the U.K. voted to leave the European Union.
On Tuesday, the U.S. Federal Open Market Committee will kick off its two-day monetary policy meeting, with analysts expecting the Fed to keep monetary policy steady, like the European Central Bank (ECB) and the Bank of England have done in the past two weeks.
Markets will then switch focus to the Bank of Japan (BOJ), who will host its own two-day meeting, beginning on Thursday. Additional fiscal and monetary stimulus is expected to jump-start economic growth.
Over the weekend at the G-20 summit in China, BOJ Governor Haruhiko Kuroda continued to dismiss talk of "helicopter money" as a means to boost inflation, according to Reuters. Brexit was a big topic of discussion at the summit and G-20 members said they would use all of their "policy tools" to achieve sustainable and strong growth despite the vote.

Italian banks under pressure

Banks in Europe, and Italy in particular, remained a focus for investors. Italy's finance minister, Pier Carlo Padoan, told CNBC over the weekend that Italian banks "do not need [a] rescue", playing down fears ahead of crucial stress tests by the ECB.
Shares of Banca Monte dei Paschi di Siena (BMPS) tanked over 8 percent after a report in Il Sole 24 Ore said the bank was getting ready to raise between 3 and 4 billion euros, but might have to find a further 2 billion euros to satisfy the ECB.
Il Sole 24 Ore said the rest of the Italian banks would pass the ECB's stress tests.