EUROPE MARKETS: Bank Stocks Lead Selloff In Europe On "Trump Trade" Worries

By Carla Mozee, MarketWatch

ING under Dutch criminal investigation

European stocks fell to a two-week low Wednesday, with bank shares among the worst performing, as investors questioned whether the new U.S. administration can soon deliver the fiscal and regulatory changes needed to support the "Trump trade".

The Stoxx Europe 600 dropped 0.9% to 372.50, hovering around its lowest since March 7, as all sectors sank into the red. Financial , industrial and basic material shares were losing the most, while the defensive utilities sector edged down.

A loss Wednesday would be the pan-European benchmark third in a row. Regional equities on Tuesday sagged during the session, but suddenly dropped to intraday lows as U.S. equities started to slide (http://www.marketwatch.com/story/us-stock-futures-edge-up-as-nasdaq-tries-for-another-record-2017-03-21). The selloff in U.S. stocks came as the yield on the 10-year Treasury hit a three-week low (http://www.marketwatch.com/story/treasury-yields-rise-after-french-presidential-debate-2017-03-21).

"Treasury yields have been reversing since the Fed meeting last week, but it seems as though [there's] concern in the U.S. over the ability for Donald Trump to pull off his substantial fiscal plans. The trigger seems to have come from the perception that Trump will struggle to get through the changes to Obamacare, and if this is the case then what else will he struggle with?" wrote Richard Perry, market analyst at Hantec Markets, in a note.

Thursday's vote in the U.S. House of Representatives on the Republican Party's health care plan may be a litmus test for investors on whether the push for reforms in the U.S. will be successful.

Read:U.S. president goes to bat for 'Trumpcare' ahead of vote (http://www.marketwatch.com/story/trump-today-president-goes-to-bat-for-trumpcare-ahead-of-vote-2017-03-21)

Shares of European banks -- many of which have U.S. operations -- have been beneficiaries of expectations that regulatory restrictions will be loosened and that the Fed will continue to raise interest rates, as higher rates help bank margins. The Stoxx Europe 600 Bank Index was shaken down 1.9% on Wednesday.

Among decliners, Deutsche Bank AG (DBK.XE) (DBK.XE) fell 1.7%, Credit Agricole SA (ACA.FR) lost 2.2% and Banco Santander SA (SAN) (SAN) moved down 1.2%.

Movers: Also weighing on the bank sector was ING Groep NV's (ING) (ING) disclosure that it is under a criminal investigation by Dutch officials could lead to significant penalties. Reports Wednesday said the investigation was tied to an alleged bribery case in Uzbekistan.

Fiat Chrysler Automobiles (FCA.MI) fell 2.7% following reports that a formal investigation into whether the company cheated in tests for diesel emissions was opened by French prosecutors.

Gemalto NV shares (GTO.AE) plunged 18% after the digital security firm cut its financial guidance.

Akzo Nobel NV (AKZOY) (AKZOY) fell 2.7% after the Dutch paint and chemicals maker rejected a second takeover offer from PPG Industries Inc (http://www.marketwatch.com/story/akzo-nobel-rebuffs-ppgs-sweetened-24-bln-bid-2017-03-22). (PPG) .

Indexes: Germany's DAX 30 index tumbled 0.7% to 11,881 and France's CAC 40 fell 0.8% to 4,962.73.

The U.K.'s FTSE 100 fell 0.9% to 7,310.99.

The euro was buying $1.0787, compared with $1.0812 late Tuesday in New York.

(END) Dow Jones Newswires

March 22, 2017 06:34 ET (10:34 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.