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Milan stocks end in positive territory as tensions over spread ease for the day

by Andrea Fontana

European stock prices closed broadly unchanged as political uncertainty surrounding the upcoming elections in Europe prompted caution despite a fresh string of earnings reports.

After spending much of the session below parity, Milan’s FTSE Mib however was able to turn the tide towards the end of the day and end in positive territory also thanks to an improvement of the situation on the secondary government bond market.

The yield difference between 10-year Italian BTPs and their Germany Bund equivalents closed at 195 basis points against 198 at the close on Tuesday. The yield ended at 2.25% against 2.34% at the closing of the previous session.

Also ISTAT reported that the number of Italian property transactions in the third quarter of 2016 rose 19.9% compared to the year earlier to 172,301. A total of 158,798 of these deals, or 92.2%, involved residential properties while 12,710, or 7.4%, involved properties for economic use.

The London FTSE 100 closed up 0.04% at 7,188.82 points, the Frankfurt DAX fell 0.05% at 11,543.38 points, the Paris CAC 40 ended up 0.26% at 4,766.60 points, in Milan the FTSE MIB gained 0.58% at 18,771.78 points and in Madrid the IBEX 35 ended down 0.02% at 9,329.40 points.

Among blue chips, banking shares fared well as the text of the legislation for the €20 billion bank rescue fund that will take a stake in BMPS is moving quickly through Parliament. UniCredit, which on Monday launched a €13 billion capital increase, yesterday gained 1.06% while Mediobanca gained 1.44% and UBI Banca 1.27%.

Banco BPM jumped 4.10% while Banca Mediolanum lost 2.47% after it said it saw a net investment inflow of €268 million in January, down from €502 million the year earlier. Nonetheless, Banca Mediolanum chief executive Massimo Doris said that he was “certain that 2017 would also bring great satisfaction.” In December, Banca Mediolanum saw a net investment inflow of nearly €1.1 billion, the group's best monthly performance ever.

In the aerospace sector, Leonardo lost 1.32% despite confirming its participation in the US Air Force T-X competition with its T-100 integrated training system. Leonardo, said in a press release, “will leverage its US company, Leonardo DRS, as the prime contractor, bringing to bear Leonardo’s leading aeronautical and simulation expertise to deliver a fully integrated solution in the best interests of the Air Force.”

Finally Fiat Chrysler Automobiles rose 2.48% as analysts and investors do not expect any particular impact from the decision of French investigators to refer the group led by CEO Sergio Marchionne to prosecutors over abnormal emissions of nitrogen oxide (“NOx”) pollutants from some of its diesel engines. The decision makes FCA the third manufacturer to be referred to French prosecutors, after VW and Renault.