European Stocks Trade Modestly Higher, Government Bonds Rally

Frankfurt (Feb 27)  European stocks notched modest gains Monday, while government bonds continued to rally, as investors focused on political risks in the region and a pending address to Congress from U.S. President Donald Trump.

The region-wide Stoxx 600 Europe Index was quoted 0.16% lower at 369.40 points by 10:45 GMT, with most major benchmarks recording cautious gains. Britain's FTSE 100 managed a small 2 point advance, helped in part by a weaker pound, which fell 0.51% to 1.2399 against the U.S. dollar on reports that Prime Minister Theresa May could be willing to agree to a second referendum on Scottish independence if the vote were held after Britain had formally exited from the European Union.

However gains were limited by steep declines for certain companies in the insurance sector, which fell sharply after the government reduced the discount rate at which personal injury claims can be calculated by 325 basis points to -0.75%. The move will likely lead to significant increases in lump sum payouts for successful litigants.

Direct Line Insurance Group Plc (DIISY) shares fell 7.5% to a 52-week low of 337.1 pence each while rival Admiral Group Plc (AMIGY) slid 3% to 1,814 pence each.

Germany's DAX index was marked 0.12% higher, even as exchange operator Deutsche Boerse AG's  (DBOEY) shares fell more than 3% after its planned merger with the London Stock Exchange Group  (LDNXF) appeared close to collapse.

The LSE said late Sunday that it was unlikely to meet a request from the EU to sell 60% of its MTS government bond trading platform in order to comply with concerns that the €29 billion merger with the Deutsche Boerse could hamper competition in the region's financial services sector. The LSE had until today to provide details as to how it would comply with the request.

Source: TheStreet