Europe close: Stocks continue to retreat from recent highs

(Sharecast News) - European markets mostly declined on Monday, with the exception of the FTSE 100, as investors continued to take profits after the recent rally took the Stoxx 600 to its highest in nearly two years. The Stoxx 600 finished the session down 0.3% at 475.33, with a 0.6% gain in London outweighed by falls in Frankfurt, Paris, Milan and Madrid.

The pan-European index has now fallen for the second straight day after hitting 476.57 on Thursday - its highest close since January 2022 - with record closes for both the Dax and the Cac in the past week.

Recent gains have been fuelled by rising hopes that the Federal Reserve may cut interest rates more than initially expected in 2024. However, markets were "brought [...] back down to earth", according to analyst Joshua Mahony from Scope Markets, after New York Fed president John Williams said on Friday that it was "premature to be even thinking about [cuts]".

"With markets currently pricing the first of six 2024 rate cuts in March, we are seeing market confidence weaken as traders await greater clarity to clear up the current confusion," Mahony said.

Dampening sentiment on Monday was the IFO Institute's Business Climate index, which unexpectedly declined to a three-month low in December. The index fell to 86.4 this month from a downwardly revised 87.2 in November - below the consensus forecast of 87.8.

London stocks rise

Blue chips on the FTSE 100 were outperforming the rest of Europe, with Entain, Vodafone, GSK and BP among the best performers.

Entain was a high riser, helped by comments from Jefferies which reiterated a 'buy' rating on the stock on the back of a high NFL engagement and betting activity in the US .Vodafone jumped after Iliad said it had submitted a proposal to merge their Italian businesses, adding the project had the unanimous support of its board of directors. GSK released positive headline results from the planned analysis of its trial of Jemperli in endometrial cancer.

Meanwhile, BP gained as oil prices jumped on the back of potential supply-chain disruption as the firm joined shipping companies to pause trade along the Red Sea due to recent attacks by Yemen's Houthi rebels. News that Russia would cut oil exports further was also supporting prices.

Tech group Software AG rose in Frankfurt after IBM agreed to spend €2.13bn on buy two of its enterprise technology platforms.

French IT firm Atos was pulling back after a surge on Friday on the back of reports that Airbus was interested in buying its cybersecurity division BDS.