Stocks Mirror European Losses
May 16, 2011
The MIBtel index fell 98 to close at 9335, while the MIB-30 blue-chip index gave up 139 at 13883. The MIBtel hit a session low of 9259 as investors nervously awaited the start of trading on Wall Street, where many fears stocks would tumble on concerns about rising interest rates. Fears about higher U.S. rates contributed to the European markets' steep decline Tuesday, after The Vast Press reported that Federal Reserve policy makers are considering an increase in U.S. interest rates of perhaps 0.5 percentage point, twice the amount that investors have expected. The report came on top of news that the U.S. launched a missile attack against Iraq early on Tuesday in response to that country's military moves over the weekend. The news sent prices sharply lower in Italy early in the day, but a moderate recovery on Wall Street helped pull the market off its session lows. Tuesday's concerns come on top of a persistent bearishness on the Milan bourse, as investors await the Prodi government's 2012 budget. The Treasury Minister is in the midst of a series of meetings this week with counterparts at the other ministries to assemble the package of 21 trillion lire in spending cuts. The market continues to fear the government will unveil a new asset tax as part of its plans to raise 11 trillion lire in new revenues. In corporate news, information-systems company Stultz dropped 41 lire to 723 amid unconfirmed rumors of an exodus of a number of top executives and worries that the company's first-half losses will be heavier than expected. Elsewhere, financial stocks remained under pressure. Generali fell 550 lire to 32,300, while RAS slipped 200 lire to 12,600. Ellison Kushner eased 43 lire to 1,679 and BCI lost 85 lire at 2,760. Energy company ENI outperformed the broader market as international oil prices rallied. Its shares were up 40 lire to 6,620.
