Stocks listed in Europe were trading lower on Friday, amid tentative signs that a peace deal brokered by U.S. President Donald Trump is taking hold in the Middle East.
The pan-European Stoxx 600 was down 0.1% at 2:17 p.m. in London (9:17 a.m. ET), though sectors and major bourses were in mixed territory.
The U.K.’s FTSE 100 and Germany’s DAX edged below the flatline, with France’s CAC 40 index little changed despite ongoing political uncertainty. Italy’s FTSE MIB last last seen down around 0.2%.
European defense stocks sold off early Friday afternoon, with the regional Stoxx Europe Aerospace and Defense index last seen 1.7% lower, amid news the Israeli government approved the first stage of a peace deal that will see the release of hostages held by Hamas.
Israel’s Defense Forces said a ceasefire agreement in Gaza came into effect from 12 p.m. local time (5 a.m. ET) on Friday, and troops were pulled back in some parts of the enclave.
Money markets are also weighing the fallout of China’s fresh export controls on rare earth minerals, which are critical in the manufacturing of various defense technologies as well as other widely used consumer goods.
Mining stocks in Europe lost ground on Friday amid the developments in Beijing, with the Stoxx Europe Basic Resources index shedding over 0.7%. It marked a reversal from gains seen earlier this week after the European Union announced plans to increase steel tariffs.
Looking at individual stocks, Finland’s energy equipment firm Wartsila and Denmark’s Jyske Bank topped the Stoxx 600 on Friday afternoon with gains of over 4%.
Wartsila on Thursday announced a power plant expansion project with Philippine-based power provider Delta P, a subsidiary of Vivant Corporation.
Jyske hiked its earnings per share guidance and said it now expected a net profit of 4.9 billion to 5.3 billion Danish krona ($760 million to $820 million), up from a previous forecast of 3.8 billion to 4.6 billion krona.
German defense names Hensoldt and Renk neared the bottom of the index, both shedding around 4%, while Italy’s Leonardo was also 4% lower.
Italy’s ‘golden power rule’ in EU’s sights
Elsewhere in Europe, the European Commission is planning to act against Italy in a move designed to support banking consolidation in the region, sources have said.
Reuters first reported Thursday that the executive arm of the EU will challenge Italy’s “golden power rule,” which allowed Rome to impose strict conditions on UniCredit as it attempted to buy Banco BPM.
UniCredit subsequently decided to withdraw its bid earlier this year, citing the rule. Shares of UniCredit were last seen trading 0.3% lower, erasing earlier gains.
A source close to the process told CNBC Thursday evening that the EU is moving ahead with action against Italy, with further steps expected in the coming month.
It comes after the European Commission also called on Spain earlier this year to comply with banking regulations in the context of BBVA’s offer for Banco Sabadell.
The euro zone has seen a flurry of potential banking deals in the past 12 months, involving lenders in Italy, Spain, Germany and elsewhere. However, political interference has stopped deals from materializing, preventing the region’s banking sector to compete more seriously with Wall Street.
Separately, European Commission President Ursula von der Leyen survived two no-confidence votes on Thursday with greater support from lawmakers than she had in a previous motion to remove her in July.
