European financial stocks led markets lower Tuesday as investors trimmed bets on a faster exit from easy monetary policy from the European Central Bank amid slowing inflation and political uncertainty.
The Stoxx Europe 600 Banks index, the broadest measure of share prices for the sector, was marked 0.34% lower by 11:15 BST steep declines for lenders in France and Germany. BNP Paribas SA (BNPQY) , France's biggest bank, was marked 4.6% lower and changing hands at €63.25, although a portion of the decline is linked to the fact that the stock is trading without the rights to its regular dividend.
Domestic rival Societe Generale SA (SCGLY) was seen 0.3% lower at €49.48 while in Germany, Deutsche Bank AG (DB) traded 1.22% lower at €16.21 each while Credit Suisse AG (CS) and UBS AG (UBS) were marked 0.77% and 1.4% lower respectively in the opening hours of trading.
Much of the banking sector pullback is linked to Draghi's appearance before the ECON Committee of the European Parliament Monday in Brussels, during which he indicated that the region's nascent recovery was still in need of "substantial" monetary policy support.
"Despite a firmer recovery, and looking through the volatile readings in HICP inflation over recent months, underlying inflation pressures have remained subdued," Draghi said. "Domestic cost pressures, notably from wages, are still insufficient to support a durable and self-sustaining convergence of inflation toward our medium-term objective. For domestic price pressures to strengthen, we still need very accommodative financing conditions, which are themselves dependent on a fairly substantial amount of monetary accommodation."
