World stock markets fell Monday as investors took advantage of a light financial news day to book profits made over the last couple of weeks — and recently buoyant bank stocks bore the brunt.
By early afternoon London time, the FTSE 100 index of leading British shares was down 21.70 points, or 0.5 percent, at 4,440.39, while Germany's DAX fell 23.73 points, or 0.5 percent, to 4,890.17. The CAC-40 in France was 48.57 points, or 1.5 percent, lower at 3,264.02.
Across Europe, banks were sold off heavily following their recent sharp gains, even though the continent's biggest bank,
HSBC Holdings PLC said its first-quarter profits were "well ahead" of last year.
HSBC's share price fell 4 percent — a marginal dent on the 25 percent plus gains it has recorded over the last seven sessions.
Elsewhere in London, Royal Bank of Scotland PLC, which is 70 percent owned by the British government, gave up over 3 percent of its recent gains, while Germany's Commerzbank AG fell 6 percent and France's Credit Agricole SA declined 3 percent.
A retreat is expected when Wall Street opens, with Dow futures down 73 points, or 0.9 percent, at 8,443 and the broader Standard & Poor's 500 futures 10.3 points, or 1.1 percent, lower at 914.40.
"With nothing of any consequence on the economic calendar for U.S. markets this afternoon it could end up being a directionless day with last week's highs around the 8,600 mark capping any short term recoveries for the Dow," said Philip Gillet, a sales trader at IG Index in London. The Dow closed last week at 8,574.65.
Stocks around the world have rallied strongly over the last few weeks, with some major indexes now in positive territory for the year, and prompting some investors to say the markets are now over the worst.
The trigger for the gains has been better than expected economic news around the world, particularly in the U.S., the world's largest economy. Mounting hopes that the world economy may recover before the year's end has fueled an increased appetite for risk. Stock markets usually start recovering between 6-9 months before an actual economic recovery emerges.
Markets have also been buoyed by indications that the banks are now in much better health to deal with any potential losses associated with the
recession after unprecedented cash-raising exercises.
"The often cited 'wall of worries' against which equity markets have climbed over the past couple of months has become smaller with economic data coming in stronger and the U.S. bank stress tests out of way," said Hans Redeker, an analyst at BNP Paribas.
Earlier in Asia, Japan recouped losses to close higher, with the Nikkei up 19.15 points, or 0.2 percent, to 9,451.98. Weighing on the broader market were automaker shares, after Toyota reported its worst-ever annual loss — and forecast an even bigger losses this year. Toyota shares fell 4.8 percent.
Chinese shares, meanwhile, snapped a six-session winning streak as the benchmark Shanghai Composite dropped 1.8 percent to 2,579.78. That dragged on Hong Kong's Hang Seng, off 301.92 points, or 1.7 percent, to 17,087.95 after climbing nearly 2 percent early in the day.
Elsewhere, South Korea's Kospi gained 0.2 percent and Taiwan's benchmark rose 1 percent; Australia and India stock measures fell.
Oil prices were lower after charging higher last week, with benchmark crude for June delivery down $1.43 cents to $57.20. On Friday, the contract rose $1.92 to settle at $58.63 a barrel, the highest level this year.
In currencies, the dollar fell to 97.90 yen from 98.38 yen and the euro dropped to $1.3575 from $1.3640.
