June 4, 2018 / 3:49 PM / in 4 months

BNP Paribas AM cuts European stocks, adds Bunds on Italy risk

LONDON, June 4 (Reuters) - The asset management arm of French bank BNP Paribas said on Monday it had reduced holdings of European equities and added more safe-haven German government bonds to reflect an escalation of political risk in Italy.

BNP Paribas Asset Management, one of the biggest money managers in Europe with 569 billion euros under management, said it retained a long position in European equities despite trimming holdings, but had moved German Bunds to neutral from underweight “to reflect the risks from Italy”.

“Over the next few months, markets are likely to remain volatile given the uncertainty associated with the new anti-establishment coalition, given the potential for clashes with the EU authorities and fiscal policy excesses,” BNPP AM aid in a note, referring to Italy’s ruling coalition between 5-Star Movement and the League.

BNP Paribas AM also said it had closed its underweight position on sterling against both the dollar and the euro .

“Our negative view on Brexit has evolved towards a softer transition, notably because the Irish border issue, which could force the UK to continue to participate in the European customs union,” it added.

Reporting by Abhinav Ramnarayan; editing by Sujata Rao

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