Europe midday: Shares extend losses on bank jitters; Kindred bucks trend

European stocks extended losses on Wednesday as fears resurfaced over the stability of the banking system after poor results by US bank First Republic saw its shares slump overnight.

The pan-European Stoxx 600 index was down 0.83% at 1145 BST with all major markets lower after a sharp fall in the US overnight and a mixed session in Asia.

Shares in First Republic almost halved overnight after the regional bank posted its latest quarterly, saying that deposits dropped 40% to $104.5bn in the first quarter.

‘’Realisation is dawning that more ominous clouds are gathering over the US economy, causing fresh nervousness for investors. Despite some better-than-expected results from the first of the big tech crowd to report, the darkening picture of consumer confidence has increased concerns about lower spending ahead,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“The worry mill is continuing to grind about the banking crisis, with First Republic Bank looking fragile after its shares collapsed to a record low. The regulatory cavalry is likely to be on standby to step in unless more funding can be raised from the large white knight lenders.

Oil prices were also under pressure, with Brent crude hovering around $81 a barrel as investors fret about weaker global demand.

In equity news, shares in Asia-focused bank Standard Chartered gained after posting a 21% rise in pre-tax profit, ahead of estimates.

Stockholm-listed betting and gaming operator Kindred Group shares surged by more than 14% after the company said it had launched a strategic review to consider a potential merger or sale of the company.

Kindred’s board of directors will consider all potential alternatives that can deliver value for the company’s shareholders, including a merger, sale or other possible strategic transactions.

Housebuilders were in favour after well-received results from Persimmon, which posted a slump in first-quarter completions but said it expects full-year 2023 volumes to be towards the top end of guidance following an improvement in sales rates since the start of the year. Peers followed suit, with Taylor Wimpey and Barratt also trading up.

Reporting by Frank Prenesti for Sharecast.com