Europe close: Markets give Italian PM the 'cold shoulder' ahead of confidence vote
Stocks on the Continent traded lower for the most part, even as America's Nasdaq Composite hit a fresh record high, weighed down by simmering political concerns around Italy.
A weak reading on IHS Markit's survey for euro area manufacturing and services sector activity for May, which economists said might herald further weakness ahead, did little to offset those.
In his first speech before his country's Senate, freshly-minted Prime Minister Giuseppe Conte said the new government would move against what he said were the human traffickers taking advantage of immigration and called for a 'citizens' income' for the poor. Conte also said he would push for the West to lift its sanctions on Moscow.
According to ANSA's English-language website, Conte told lawmakers: "The political parties that make up the government majority have been accused of being populist and anti-system. If populism is the attitude of listening to people's needs, then we lay a claim to it."
A confidence vote in both houses was set to follow, with the first one due in the Senate on Tuesday evening, followed by another in the lower house on Wednesday, with analysts expecting he would gain lawmakers' backing in both.
Nevertheless, by the close of trade the benchmark Stoxx 600 was 0.31% or 1.22 points lower at 386.89, alongside a drop of 1.18% or 259.80 points for Milan's FTSE Mibtel to 21,750.15.
Significantly, the yield on Italy's benchmark 10-year government bond was 25 basis points higher to 2.79%. That remained well below the 52-week high of 3.44% seen on 29 May, but was nevertheless well above the intraday low of 2.56%.
To take note of too, technical analysts at WebFG UK were pointing to an 'expanding triangle' formation on the FTSE Mibtel which, they said, was more likely than not to end in tears.
In parallel, Madrid's Ibex 35 slipped 0.66% or 63.90 points to 9,686.49, with the yield on similarly-dated Spanish sovereign debt up by seven basis points at 1.40%.
The German Dax proved the exception, adding 0.13% or 16.38 points to 12,787.13.
On a more positive note, perhaps, according to the Journal, on Tuesday Beijing offered to increase its purchases of US goods by almost $70bn if the White House dropped its threat of tariffs.
Crude oil futures traded lower, with the front month Brent contract down by 1.01% to $74.54 per barrel on the ICE, after Bloomberg reported that Washington had "quietly asked" Saudi Arabia and other OPEC producers to increase their supplies by roughly 1.0m barrels a day.
Contrary to some traders' expectations, ECB chief Mario Draghi and ex-ECB chief Jean Claude Trichet did not make any market-moving remarks at an event in Frankfurt to mark the 20th anniversary of the monetary authority.
Earlier, IHS Markit reported that its so-called composite euro area purchasing managers' index for May was unchanged from its preliminary reading, at 54.1, which was down from April's reading of 55.1.
"With the economic indicators turning down at the same time as political uncertainty has spiked higher, the eurozone’s outlook has darkened dramatically compared to the sunny forecast seen at the start of the year," said IHS Markit business economist Chris Williamson in reaction to the figures.
Growth in euro area retail sales volumes meanwhile fell short of forecasts in April, edging higher by 0.1% month-on-month and 2.1% on the year (consensus: 0.3%), according to Eurostat.
In corporate news, Siemens Gamesa boss Markus Tacke told Handelsblatt that prices in the sector had stopped falling.
Elsewhere, overnight Italy's Enel purchased a majority stake in Eletropaulo for approximately $1.48bn (£1.11bn).