Milan

Election concerns drive down Milan's major stock exchange

Milan's FTSE Mib losses more than 3% in Thursday trading

Election concerns drive down Milan's major stock exchange

Milan, February 21 - Milan's major stock index plunged more than 3% in trading Thursday, pulled down by election concerns and leading a weaker trend in other European equity markets. On the Milan Stock Exchange, the FTSE Mib fell by 3.13% in trading, to end the day at 16,009 points. Meanwhile, the Italian bond spread with the German benchmark shot up during the day, reflecting investor uncertainty and concerns about the outcome of the Italian election this Sunday and Monday. The spread reached 292 basis points, a considerable increase over Wednesday's close of 277 basis points. The yield on 10-year paper at Thursday's close stood at 4.49%. Negative economic news also weighed on European markets, after the region's purchasing managers' index (PMI), suffered a surprising drop. The preliminary eurozone PMI for services and manufacturing for February fell to a two-month low of 47.3, compared to 48.6 in January. A reading below 50 signals a contraction in business activity. Some economists had hoped the index, which is based on surveys of business activity, might actually rise. In Italy, uncertainty continued over the outcome of the upcoming national vote. Although the centre right had been trailing Pier Luigi Bersani's centre left by double figures in the polls, ex-premier Silvio Berlusconi managed to narrow the gap to under 5% in most polls before a pre-election blackout on the publication of opinion surveys kicked in earlier this month. Berlusconi, a 76-year-old media magnate, now claims that the centre right had now overtaken the centre left. That is rattling investors as Berlusconi has pledged to undo many of the fiscal and economic reforms introduced by outgoing Premier Mario Monti. Berlusconi has also pledged to refund billions of euros in tax dollars collected in 2012, which would put the government's books in peril. In other European markets, Frankfurt's DAX fell by 1.88% to reach 7,583.57 points, while Paris's CAC 40 fell by 2.29% to close at 3,624.80 points, Spain's IBEX 35 closed trading 1.82% lower at 8,014.50 points while London's FTSE 100 ended the trading day 1.62% lower to close at 6,291.54.

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