Spanish shares lead Europe lower after fragmented election result

 21 Dec 2015 - 11:49

Spanish shares lead Europe lower after fragmented election result


LONDON: Spain's top stock index led European shares down on Monday after an inconclusive election result cast fresh uncertainty over the outlook for the country's reform programme and the broader economy.

Spain's IBEX fell 2.7 percent, with all but one stock in negative territory and banks among top fallers.

Neither Prime Minister Mariano Rajoy's conservatives nor left-wing parties won a clear mandate to govern following a historically fragmented vote in Spanish elections on Sunday, with talks to form a coalition government expected to take weeks.

The result cast a shadow over an economic reform programme that has helped pull the country out of recession.

"A centre-right coalition cannot reach a majority... (and this) injects even greater political uncertainty. This is unlikely to be a positive development for markets," Marco Stringa, senior economist at Deutsche Bank, said in a note.

"Overall the main risk remains political impasse due to the unprecedentedly fragmented parliament."

Overall, the pan-European FTSEurofirst 300 fell 0.3 percent to 1,415.71 by 0811 GMT.