by Diana Mandia

(Reuters) – European stock markets ended higher on Monday as volatility was pronounced in Paris, with the French government, targeted by two motions of censure from the left and the far right, threatening to fall this week.

In Paris, the CAC 40, very volatile during the session, gained 0.02% to 7,236.89 points. In Frankfurt, the Dax advanced 1.57% and in London, the FTSE 100 gained 0.31%.

The EuroStoxx 50 index increased by 0.88%, the FTSEurofirst 300 by 0.71% and the Stoxx 600 by 0.66%.

The French Prime Minister, Michel Barnier, on Monday held his government responsible for the draft social security budget (PLFSS) for 2025, exposing himself in return to censorship from deputies of the left opposition and the Rassemblement national (RN).

A last minute concession from the Prime Minister was not enough to obtain the support of the RN to avoid recourse to article 49.3 of the Constitution, which allows the bill to be adopted without a vote.

The upcoming vote on a motion of censure against the government of Michel Barnier, who has only been in office since September, has reinforced fears regarding the sustainability of the French public debt, and accelerated the sale of the euro, then that the political crisis risks being prolonged.

“With no new elections being able to be organized before next summer, this can only lead to an intensification of the political paralysis that has hit France since Emmanuel Macron’s unfortunate decision to call early elections in June,” Rupert said. Thompson, chief economist of IBOSS.

VALUES

French banks were affected on Monday by the political situation in France: BNP Paribas lost 1.2%, Crédit Agricole SA 0.87% and Société Générale 2.6%.

French luxury brands such as Hermès and LVMH rose by more than 3% each, benefiting from the weakness of the euro.

Stellantis also suffered (-6.3%) after the abrupt resignation of its general manager, Carlos Tavares, as did the European automobile index, which lost 0.39%.

French payments group Worldline, which five people familiar with the matter say is attracting interest from private equity firms, took 14%.

Ipsos, which confirmed on Monday discussions for a takeover of Kantar Media, on the other hand lost 4.4%.

Elsewhere in Europe, Delivery Hero fell 10.5% as the delivery platform announced on Monday that delivery workers at its Glovo unit in Spain would be hired as employees.

A WALL STREET

At closing time in Europe, the Dow Jones lost 0.31%, while the Standard & Poor’s 500 gained 0.21% and the Nasdaq Composite 0.98%.

Chipmaker Intel gains 4.7% after announcing the retirement of its CEO Pat Gelsinger.

TODAY’S INDICATORS

Investors had to digest on Monday the sharp drop in manufacturing activity in the euro zone in November, as well as a sharp decline in demand which removes the prospects of an imminent recovery, according to the final HCOB index of directors of purchasing power (PMI) of the euro zone, compiled by S&P Global.

In France, the manufacturing sector posted the largest drop in new orders in November since the first wave of the COVID-19 pandemic in 2020, against a backdrop of weakening domestic and international demand, while in Germany the sector continued its contraction.

In the United States, the ISM manufacturing index, on the other hand, improved in November, with orders increasing for the first time in eight months and factories experiencing a significant drop in input prices, according to the monthly survey of the Institute for Supply Management (ISM) published Monday.

CHANGES

The euro fell sharply on Monday and is on course for its biggest daily decline since early November due to growing concerns about the future of the government in France and the fate of its proposed budget to reduce the country’s public deficit.

The European currency dropped 0.9% to 1.0480 dollars.

The greenback, on the other hand, continued to gain ground (+0.73%) after the publication of strong data on the American manufacturing industry, which reinforced bets that the Federal Reserve could interrupt interest rate cuts at its December meeting.

RATE

Euro zone bond yields fell on Monday as demand for safe-haven German bonds rose and investors learned of last month’s sharp decline in manufacturing activity in the euro zone.

The yield on the ten-year German Bund thus lost 5.2 basis points to 2.0370%, while that of its two-year counterpart dropped 5.7 basis points to 1.8990%.

In France, the yield on the ten-year OAT, on the other hand, rose 1.9 basis points to 2.9150% amid concerns about French sovereign debt.

The spread between France and Germany’s 10-year bond yields – a measure of French borrowing costs relative to the eurozone benchmark – increased to 88 bps, closing in on 90 bps of last week, a 12-year record.

The yield on ten-year Treasuries fell by 1.4 basis points to 4.1801%. The two-year, the most sensitive to rates, on the other hand took 1.6 basis points to 4.1899%, the data testifying to the solidity of the economy and pleading in favor of a more gradual reduction in interest rates .

OIL

Oil prices fell on Monday after their recent increases.

Brent lost 0.38% to $71.57 per barrel and American light crude (West Texas Intermediate, WTI) lost 0.35% to $67.76.

TO BE FOLLOWED ON DECEMBER 3:

(Some data may have a slight lag)

(Written by Diana Mandiá)

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