European shares weighed by US debt ceiling concerns, slide in financials

European shares weighed by US debt ceiling concerns, slide in financials

By Sruthi Shankar

(Reuters) – European shares slipped on Wednesday as concerns about whether the United States can avoid a debt default, as well as a slew of downbeat corporate updates weighed on sentiment.

The continent-wide STOXX 600 slipped 0.1%, with financial services companies and real estate firms leading declines.

Euronext NV dropped 3.8% after the stock exchange operator reported a fall in first-quarter revenue and income, while the London Stock Exchange Group dipped 3.9% after an investor consortium including U.S. buyout firm Blackstone and Thomson Reuters sold shares worth about 2.7 billion pounds ($3.41 billion).

German lender Commerzbank AG dropped 6.5% after its net interest income forecast for the full year fell short of analysts’ expectations.

A risk-off mood prevailed in global markets as top U.S. congressional Republican Kevin McCarthy told reporters both the parties remained far apart on an agreement to lift the debt ceiling but added that it would be “possible to get a deal by the end of the week.”

European stock markets have traded in tight ranges this month as investors assess the outlook for European and U.S. interest rates and the risk of a U.S. debt default, with lawmakers struggling to reach a deal over lifting the debt limit.

UBS Group AG inched up 0.5% after the Swiss bank said it expects a financial hit of about $17 billion from the takeover of Credit Suisse Group AG but also estimated a one-off gain stemming from a so-called “negative goodwill” of $34.8 billion.

“While this is slightly smaller than some industry estimates, it’s a heavy cost to bear, and has been partly put down to the lack of time it was able to complete due diligence and assess the web of problems at Credit Suisse,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

European Central Bank (ECB) rate hikes are already weighing on housing investment across the euro zone and the impact is likely to increase, although it will be smaller than in the United States, the ECB said in a study.

SAP added 1.7% after the German business software maker raised its 2025 total revenue outlook for continuing operations and announced a share buyback of up to 5 billion euros.

Siemens AG climbed 2.7% after the German engineering and technology group raised its full-year sales and profit guidance.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sonia Cheema)