Europe midday: Banks lead, tech slides, Salvini defiant
Stocks have come off their session lows, thanks to another sharp reversal in Italian government bonds after one of the country's deputy Prime Ministers, Matteo Salvini, promised tax breaks for those who purchase debt issued by the country.
According to ANSA, Salvini told state broadcaster RAI: "We certainly don't want to ask for gold for the Fatherland (from people). But we have been convinced about the need to help those who invest in Italian bonds for years and it is in the contract of government. It's possible to consider new bond issues, with lower taxes for those who invest in their own country."
Separately, Salvini said he would "keep going straight on" with the 2019 budget and plans to partially unwind the 2011 pension reforms, which was known in Italy as the Fornero law.
During the previous session, both the Italian central bank and the country's parliamentary budget office had refused to sign-off on the coalition government's budget plans.
Against that backdrop, as of 1231 BST, the benchmark Stoxx 600 was dipping 0.19% or 0.72 points to 372.21, while Milan's FTSE Mibtel had reversed early losses and was gaining 0.11% or 21.81 points to 20,084.15, although its peers in Germany and France remained under water.
The Cac-40 was down by 0.55% or 29.39 points at 5,289.16 while the German Dax was declining 0.50% or 59.89 points to 11,917.81.
At the sector level, Banks had taken over from Oil&Gas as the main prop for the market, with the Stoxx 600's sector gauge for lenders bouncing 1.62% or 2.6 points to 154.54, while Oil&Gas was up by 0.94% or 3.36 points to 361.37, helped by concerns that hurricane Michael might exacerbate the supply situation Stateside.
Linked to the above, analysts at Barclays Research were telling clients that "Bond yields and the oil price are reaching fresh highs, which many equity investors appear to be increasingly concerned about. We believe however that both are reflective of the resilient nominal growth backdrop, which is positive for equities."
To the downside, the Stoxx 600 Technology gauge was plummeting 2.33% or 10.48 points to 439.14 and fast approaching its 52-week lows at 419.
On Tuesday evening, Bloomberg reported that a major US telecoms outfit had uncovered "manipulated" hardware that had been supplied by Super Micro Computer for its network.
Investors were also thought to be shifting from so-called 'growth' stocks (which include tech companies' shares) to 'value' ones as government bond yields sapped the former of some of their allure.
In parallel, the yield on the benchmark 10-year Italian government note was marginally lower to 3.48%, while euro/dollar was edging higher by 0.06% and trading at 1.14951.
Pressuring Italian BTPs earlier during the same session, Salvini had said he was "absolutely sure" the risk premium on the country's debt would not exceed 400 basis points.
The risk premium or yield spread versus similarly-dated German Bunds was at 293 basis points, having reached 315 on Tuesday.
Speaking before the budget committee of Italy's lower house of parliament overnight, the economy minister, Giovanni Tria, had sounded a similar note, saying that if the yield spread on Italian debt hit 400 or 500 basis points, then "the government will do what it needs to do, as Draghi did," ANSA reported.
Elsewhere, INSEE reported that industrial production in France was higher by 0.3% month-on-month in August, edging past economists' forecasts for a rise of 0.2%.
Meanwhile, in Italy, ISTAT reported that industrial output jumped by 1.7% versus July (consensus: 0.8%).
However, economists at Barclays Research and UniCredit Research stuck to their forecasts for subdued Italian growth, with the latter forecasting that Italy's gross domestic product would expand at a quarter-on-quarter pace of just 0.1% over the three months to September.
For later in the day, the market spotlight was expected to be firmly on the release of the US producer price index for August, at 1330 BST.