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European shares cautious as ECB meets, UK votes; Italy banks in focus
June 8, 2017 / 9:21 AM / in 6 months

European shares cautious as ECB meets, UK votes; Italy banks in focus

* STOXX up 0.15 pct, FTSE flat

* Italian banks lag sector on rescue talk

* RWE, E.ON extend gains

* Vodafone goes ex dividend (Adds details, updates prices)

By Danilo Masoni and Stephen Jewkes

MILAN, June 8 (Reuters) - European shares steadied on Thursday helped by stronger bank stocks and a bounce in oil prices but caution dominated as Britons vote in a general election and the European Central Bank holds its policy meeting.

The STOXX 600 rose 0.15 percent with financials providing the biggest lift but weighed down by weaker telecom shares, while Britain’s blue chip FTSE index was flat.

The pan-European benchmark has struggled since hitting a 21- month high in May with investors seeking fresh catalysts after a rally fuelled by strong earnings and record inflows.

On Thursday the congressional testimony in the U.S. from ex-FBI director James Comey, who was fired by President Donald Trump last month, will also keep investors on the edge.

“Markets are longing for more certainty, which will be needed in order to post the next leg higher. Today and tomorrow certainly have the potential to provide traders with a clearer outlook what the UK, the US and the Euro-zone is concerned,” said Markus Huber, a trader at City of London Markets.

The ECB is expected to leave policy unchanged later today as inflation remains below its target despite stronger economic growth in the euro zone.

In Britain, opinion polls on Wednesday showed that Prime Minister Theresa May was on course to increase her majority in parliament in Thursday’s election, helping the sterling.

Bank stocks rose for a second day following the swift rescue of Spain’s Banco Popular by bigger rival Santander, but Italian banks were under pressure on reports they could join the state in the rescue of troubled regional lenders in the Veneto region.

A source familiar with the matter said Rome was putting pressure on heavyweights Intesa SanPaolo and UniCredit to take part so that other banks would follow their example. Intesa was down 1 percent and UniCredit was flat.

The broader euro zone bank index gained 1 percent.

“The important thing is to get a solution fast and remove the uncertainty,” Stefano Fabiani, fund manager at Zenit said. “Santander wobbled a bit early yesterday but then it went positive. And it’s the same thing here.”

Santander in Madrid rose 2.2 percent.

Utilities also rose with RWE and E.ON rose 0.3 and 1.7 percent respectively adding to their rally in the previous session after a nuclear energy tax which penalised them was scrapped.

French credit insurance company Euler Hermes rose 2 percent following a report that Allianz is exploring a buyout of its smaller rival. Allianz also rose by 1 percent.

Biggest weight to the STOXX index was Vodafone, down 3.7 percent, as the stock went ex dividend. Its fall dragged the European telecoms index down 0.8 percent, making it the biggest sectoral loser in Europe. (Reporting by Danilo Masoni; Editing by Tom Heneghan)

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