Thursday May 8, 06:18 PM
Milan shares close lower on interest rate outlook, Unicredit among leader UPDATE
(Updating with full)
MILAN (Thomson Financial) - Share prices closed lower on concerns that European Central Bank interest rates will not be cut in the short-term, with banks leading the losers, including large capitalisation Unicredit SpA after results, brokers said.
The Mibtel index fell 1.04 percent to 25,994 points and the S&P/Mib was off 1.35 percent to 34,082.
Volume traded was an estimated 7.519 billion euros.
Brokers said that the ECB's decision to leave rates unchanged was not a surprise, though the unanimous decision by the ECB council and the continued worry on inflation was taken negatively.
One broker said he does not expect rates to fall 'this side of the Autumn'.
One economist said that the ECB statement suggests the bank believes price growth could last longer than it previously expected.
Among banks, Banca Popolare di Milano (Milan: PMI.MI - news) lost 4.28 percent to 7.695 euros, Banco Popolare (Milan: BP.MI - news) fell 2.89 percent to 4.80, Unicredit (Milan: UCG.MI - news) was off 2.89 percent to 4.80, and Intesa Sanpaolo SpA (Milan: ISP.MI - news) was off 2.54 percent to 4.65.
Brokers said Banco Popolare was also depressed by the petering out of speculation on a strategic alliance for affiliate Banca Italease (Milan: BIL.MI - news) .
Intesa Sanpaolo was rated 'buy' UBS (Virt-X: UBSN.VX - news) in a note, trimming its price target to 5.3 euros, from 5.4.
UBI Banca (Milan: UBI.MI - news) fell 2.45 percent to 17.07. UBS rated the stock 'buy' with the price target cut to 20.25 euros, from 21.20.
Assicurazioni Generali SpA (Milan: G.MI - news) fell 0.18 percent to 28.36 after higher than expected results. One broker said an international bank is recommending switching to Generali's unit Alleanza Assicurazioni SpA.
Alleanza lost 2.44 percent to 8.50. Brokers said they don't see Generali taking a quick decision to buy-out Alleanza minorities after yesterday's departure of Alleanza CEO Ugo Ruffolo, who was seen blocking a buy-out.
Utilities are seen boosted by merger speculation. Snam Rete Gas SpA (Milan: SRG.MI - news) rose 1.09 percent to 4.2325. Hera SpA fell 2.01 percent to 2.485.
Seat Pagine Gialle SpA (Milan: PG.MI - news) was up 0.64 percent to 0.1261, extending yesterday's gains on short-covering.
Tiscali SpA (TIS.MDD - news) was up 2.85 percent to 2.5425 on latest speculation on its sale. Telecom Italia SpA (Milan: TIT.MI - news) fell 1.87 percent to 1.311 ahead of tomorrow's results.
In the construction sector, Italcementi SpA lost 1.44 percent to 13.59. JP Morgan rates the stock 'overweight' with a 20.88 euros target. Brokers see infrastructure stocks gaining with the new government.
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