European stocks dip as Italian banks, downbeat data weigh

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, August 7, 2023. REUTERS/Staff/File Photo

European shares dropped on Tuesday, as Italian banks came under pressure after the cabinet approved a 40-percent windfall tax on lenders, while sticky inflation print from Germany and weak China trade data further dented risk sentiment.

By 0707 GMT, the pan-European STOXX 600 index was down 0.3 percent.

Italian banks such as Intesa Sanpaolo and UniCredit fell more than 5 percent after Deputy Prime Minister Matteo Salvini said the 40 percent levy on banks’ extra profits will feed items such as a reduction of the tax wedge, tax cuts and financial support to holders of mortgages on first homes.

Italy’s banking-heavy FTSE MIB slid 1.4 percent, while European banks dropped 1.8 percent after ratings agency Moody’s cut credit ratings of several small- to mid-sized U.S. banks and said it may downgrade some of the biggest lenders in the United States.

Germany’s DAX index fell 0.4 percent after data showed inflation accelerated 6.5 percent in July, in line with economist expectations.

China-exposed miners and automakers fell after data revealed imports and exports in the world’s second-largest economy fell much faster than expected in July, threatening growth prospects and heightening pressure on Beijing to provide fresh stimulus.

Shares of Glencore slumped nearly 3 percent after the global miner said its earnings had halved in the first half.