Posted By Jessica Weisman-Pitts
Posted on December 2, 2024
By Joao Manuel Vicente Mauricio and Ankika Biswas
(Reuters) -French shares climbed on Monday, reversing early declines, as a further budget concession from the country’s government to the National Rally party came as a relief for investors worrying over domestic political turmoil.
The pan-European STOXX 600 index rose 0.6%, hitting a three-week high as of 1251 GMT, with France’s benchmark CAC 40 inching 0.3% higher, after falling 1% earlier in the session.
French Prime Minister Michel Barnier made another major concession to Marine Le Pen’s far-right RN party, dropping planned cuts to medication reimbursements in a last-minute bid to get his 2025 budget bill over the line.
This follows last week’s scrapping of an electricity price hike worth around 3 billion euros.
“Now it’s up to Le Pen to accept it, because she has further demands. Barnier may be testing the market on how it will absorb the weight of the concessions,” said Ipek Ozkardeskaya senior market analyst at Swissquote Bank.
“I still see risks tilted to the downside until someone comes and says that a deal was reached.”
French banks trimmed losses after the news, with Credit Agricole and BNP Paribas last trading just 0.1% and 0.3% lower, respectively.
Earlier in the day, investor mood towards French assets worsened sharply, with RN president Jordan Bardella saying it would force the collapse of Barnier’s government unless he yields to their demands on the budget in a “last-minute miracle”.
German’s main DAX index hit a record intraday high, as markets added to bets of rate easing from the European Central Bank following a string of comments from policymakers.
Meanwhile, Paris and Milan-listed Stellantis’ shares slumped 7% each after CEO Carlos Tavares’s resignation. The automobile index emerged as the worst-hit, down nearly 2%, with Renault and Valeo dropping 3% each.
Among other major single-stock movers, Delivery Hero slid 11% as the German delivery company said that its freelance riders at its Glovo unit in Spain would be hired as employees.
(Reporting by Joao Manuel Mauricio in Gdansk and Ankika Biswas in Bengaluru; Editing by Janane Venkatraman and Abinaya Vijayaraghavan)
