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Jul 4, 2016

European Markets at Close Report, by CNBC on July 4, 2016:: Europe Ends in The Red as Caution Reigns Post-Brexit, Autos, Italian Banks Slip

European markets ended in negative territory on Monday, as caution over the implications of a British exit for the EU and the U.K. returned to weigh on investor sentiment.

The pan-European STOXX 600 finished 0.7 percent provisionally, while sectors closed mostly in the red.
All major European bourses closed in the red, with the FTSE 100 off 0.9 percent, while its domestically-focused FTSE 250 index, tumbled some 2 percent. France's CAC slipped 0.8 percent, while Germany's DAX fell 0.7 percent.

UK tax cut?

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In U.K. news, Chancellor George Osborne is planning to cut corporation tax to less than 15 percent in an attempt to offset the shock to investors of the country's decision to leave the European Union, the Financial Times reported on Sunday. In addition, Nigel Farage, leader of the U.K. Independence party, announced he was standing down as the party's frontman, saying his "political ambition" had been achieved when the U.K. voted to leave the EU.
And the uncertainty surrounding the Brexit vote continued to be felt as Markit's construction Purchasing Managers' Index fell to 46.0 in June from 51.2 in May, the lowest level since June 2009. It was below the 50.0 mark for the first time since 2013, which separates contraction and expansion. The data sent U.K. property stocks to the bottom of the STOXX 600, with PersimmonLand SecuritiesTaylor Wimpey andBritish Land, all off 6 percent or more each.
European markets failed to follow in Asia's footsteps, where markets finished higherThe Australian federal election over the weekend failed to produce a clear winner, with major parities failing to gain an outright majority, raising the prospect of prolonged political uncertainty. Wall Street is closed on Monday for the Independence Day holiday and volumes are expected to be low across Europe.

Italian lenders lower

Italian Prime Minister Matteo Renzi could be heading for a showdown with Brussels with a plan to rescue the country's ailing banks with public funds if necessary, potentially defying new European banking regulations, the FT reported. Former leader Mario Monti told CNBC the move could be a dangerous, however.
The news sent shares of a number of the country's lenders into the red.Banco PopolareBanca Popolare dell'Emilia Romagna and UniCreditwere all trading sharply lower. BMPS was down over 12 percent after the European Central Bank told it to cut its bad loans by 30 percent in the next three years.
Meanwhile, HSBC announced that it had completed the sale of its entire Brazil business, sending shares down over 1 percent.

Commodities rally, while autos grind to a halt

In oil markets, crude wavered on Monday, as signs of slowing demand in Asia offset gains. Prices were initially higher on the back of comments made by the Saudi energy minister, who said the market was heading towards balance. Brent held above $50, while U.S. crudedipped below $49 per barrel.
Meanwhile Europe's best performing sector was basic resources, boosted by the sharp price rise in silver prices, which crossed $21 for the first time in two years on Monday. The move helped precious metal miners Fresnillo and Randgold Resources rally, up 8 and 4.8 percent respectively. GlencoreAntofagasta and ArcelorMittal were also sharply higher.
Autos under-performed its fellow counterparts, trading over 2 percent down, after Kepler Cheuvreux cut its price target on a whole host of European automakers'. ValeoPeugeot CitroenRenaultDaimler,Porsche and BMW were just a handful to receive price cuts. All were trading sharply lower.
In other news, shares of carmaker Volkswagen were slightly lower after the company's chief executive Matthias Muller rejected compensation calls for European customers in the wake of the 'Diesel-gate' emissions scandal. In an interview with German newspaper Welt am Sonntag, Muller said that there was a "different situation here in Europe." Shares were off some 2.4 percent.
In other business news, in the London Stock Exchange Group's shareholder meeting on Monday, 99.89 percent voted in favor of the merger deal with Deutsche Boerse. The merger is expected to be completed in the first quarter of 2017. Shares of the London Stock Exchange Group and Deutsche Boerse were trading deep into negative territory following of the vote.