European shares pause after Fitch downgrades Italy
LONDON, March 11
LONDON, March 11 (Reuters) - European shares paused early on Monday around four-year highs as Italian banks took a hit after Italy's credit downgrade, although equities remain supported by unprecedented stimulus form governments and central banks.
By 0811 GMT, the FTSEurofirst 300 was down 1.71 points, or 0.1 percent, at 1,193.49, having closed at 1,195.20 on Friday -- a level not seen since September 2008 -- boosted by strong jobs data in the world's largest economy and seemingly unwavering support from central banks globally, which is stabilising the global financial system and inflating asset prices.
Eight of the top nine fallers in the European banking sector , down 0.6 percent, were Italian banks where pressure could grow to increase provisions against bad debt after Fitch downgraded the country's credit rating by one notch to BBB-plus, with a negative outlook, citing political uncertainty following last month's inconclusive election.
Goldman Sachs cut its estimates across the board for Italian banks as NPLs (non-performing loans) continue to rise and coverage ratios continue to drop, while the pressure to take out provisions is mounting.
Citigroup, meanwhile, said it expects Italian banks in its coverage to report losses in fourth-quarter, due mostly to a high level of provisions.