Stocks fall in Europe as automakers weaken; Spanish equities at over one-week low

By Shashwat Chauhan and Pranav Kashyap

European stocks slipped on Monday, pressured by automakers despite gains in tech and mining, while Madrid's benchmark closed at its lowest in over a week.

The pan-European STOXX 600 SXXP fell as much as 0.4% before closing 0.1% lower, weighed down by defensive stocks such as Unilever ULVR and Nestle (NSEN.S).

Spanish banks dragged Madrid's benchmark IBC 1.2% down to its lowest since September 10.

Porsche PAH3 sank over 8%, its worst performance in nearly three years, after the carmaker warned of delays in electric vehicle rollouts and trimmed its 2025 outlook. It helped to send the autos index (.SXAP) to an over one-month low.

"The re-basing of (Porsche's) guidance may be the last but leaves the turnaround a drawn-out affair with product cycle and brand challenges," Jefferies analysts said in a note.

Shares of Porsche-parent Volkswagen VOW, which also cut its 2025 profit outlook, fell 7.1%.

Euro zone banks (.SX7E) dipped 0.9%, with Spain's Sabadell SAB down 3.9% after bigger rival BBVA BBVA said it raised its bid for the bank by 10% to 3.39 euros per share. BBVA also fell 2.6%.

Heavyweight Roche RO limited losses on the STOXX 600. The drugmaker rose 2.3% after signalling its ambition to join Eli Lilly and Novo Nordisk at the top of the booming weight-loss market.

Technology stocks (.SX8P) also helped to stem losses, climbing 0.8%. Chipmakers ASML ASML and ASMI ASM advanced 2.1% and 1.7%, respectively.

European miners (.SXPP) added 1.4%, with UK-listed precious metal miner Fresnillo FRES among the top gainers with a 4.6% rise as gold prices surged to an all-time high.

Other top miners including Glencore GLEN and Rio Tinto RIO were up 2% and 2.1%, respectively.

EYES REMAIN ON THE FED

Investors weighed comments from at least five Federal Reserve officials, many of whom questioned the need for more U.S. interest rate cuts with inflation still above target and the labor market holding firm. Investors looked ahead to Fed Chair Jerome Powell's speech on Tuesday, following last week's 25-basis-point cut.

Meanwhile, European traders await fresh flash PMI data for September on Tuesday.

"The European central bank's battle against high inflation has been won. We think the ECB may be forced to reduce interest rates next year," said Jack Allen-Reynolds, deputy chief euro zone economist.

"European (stocks) can resume leadership later in the year, but maybe not just yet," said Neil Wilson, investor content strategist at Saxo.

An interest rate decision in Sweden is expected on Tuesday, while Switzerland's is due on Thursday and a key U.S. inflation reading is slated for Friday.

Among other stocks, Fugro FUR dropped 9% after the Dutch geo-data specialist withdrew its annual forecast, citing "significant changes" in market conditions in recent weeks.

Tate & Lyle TATE fell 6.4% after Morgan Stanley downgraded the food ingredients maker to "underweight" from "equal-weight".