European stocks fell on Monday, led lower by banking and auto stocks, after Canadian rating agency DBRS cut Italy’s sovereign credit rating and the pound dropped against the dollar and euro on growing concerns about a ‘hard’ Brexit.
U.K. stocks also edged lower after touching a fresh record high in early trade amid weakness in the pound.
The German DAX was losing 0.7 percent and France’s CAC 40 index was declining 0.8 percent, while the U.K.’s FTSE 100 was marginally lower at 7,332.70, erasing early gains.
Italy’s Unicredit lost over 3 percent on concerns that the move by DBRS could raise borrowing costs for the country’s struggling banks. Commerzbank, Deutsche Bank, BNP Paribas, Credit Agricole and Barclays lost 1-2 percent.
Automakers, BMW, Daimler, Volkswagen, Renault and Peugeot also fell 1-2 percent.
Swedish clothing retailer H&M tumbled 2.5 percent after its December sales growth lagged forecasts.
German luxury fashion brand Hugo Boss soared 9 percent after saying it expects 2016 operating profit at the upper end of prior range.
Essilor shares soared 12 percent. The French lensmaker and Italy’s Luxottica, the maker of Ray-Ban sunglasses, have agreed a 46 billion euro merger deal to create a global leader in the fast-growing eyewear industry. Shares of Luxottica climbed 7 percent.
British luxury brand Burberry advanced 1.5 percent on news its incoming chief executive Marco Gobbetti will take up the position from July 5.
On a day light day on the economic front, German manufacturing employment increased in November from a year ago, data from Destatis showed. The number of people worked in local manufacturing units grew by around 40,000 or 0.7 percent from prior year.