By Carla Mozee, MarketWatch

Citi raises year-end target for Stoxx 600

European stocks dropped Monday, as equity investors got their first chance to react to U.S. President's Donald Trump's inauguration speech, seen as taking a protectionist tone.

The Stoxx Europe 600 fell 0.6% to 360.33. The index on Friday closed lower by 0.1% ahead of Trump's speech in Washington D.C. The pan-European benchmark also finished last week with a 0.9% decline, the first weekly fall in four.

At the same time, the euro rose against the U.S. dollar. It was buying $1.0730, up from $1.0703 late Friday in New York. A weaker euro is more favorable for European exporters. The U.S. dollar overall was continuing to slide against major rivals Monday.

"U.S. dollar bulls were not really impressed of the new presidents' inauguration speech, as it was focused more on protectionism and lacked concrete plans to drive growth," said Hussein Sayed, chief market strategist at FXTM, in a note.

"Repealing Obamacare, building a Mexican border wall, and withdrawing from the Trans Pacific Partnership was not the kind of news investors wanted to hear; they needed to know when pro-growth fiscal policies will come into play and more importantly whether Congress will approve them," Sayed said.

On major European indexes, Germany's DAX 30 gave up 0.9% to 11,531.46 and France's CAC 40 fell 0.8% to 4,809.60.

"Trump's first 100 days will now be the key focus, and while he may be given a short honeymoon period by the market, patience will run out quickly if there is little progress towards making good on his promises of tax cuts, stimulus and deregulation," wrote James Woods, global investment analyst at Rivkin Securities.

Meanwhile, European portfolio strategists at Citigroup on Monday raised their 2017 year-end target for the Stoxx 600 to 410, from a previous year-end forecast of 380. They were upbeat on economic growth and the potential for companies' earnings-per-share performance. "GDP and EPS growth appear to be on improving trends," they said.

Movers: Assicurazioni Generali SpA (G.MI) climbed 5.2%, topping the Stoxx 600 following a report by Italian newspaper La Stampa that Allianz SE (ALV.XE) is considering a bid for the insurer.

Paddy Power Betfair PLC (PPB.DB) shares fell 1.3% as the betting firm said its 2016 earnings should come in around the mid-point of its guidance (http://www.marketwatch.com/story/paddy-power-betfair-sees-2016-earnings-at-midpoint-2017-01-23) of GBP390 million ($479 million) to GBP405 million.

Essentra PLC (ESNT.LN) shares were 5% lower after the plastics components supplier said adjusted operating profit for 2016 will be around the bottom end of its previous guidance (http://www.marketwatch.com/story/essentra-sees-adj-profit-at-bottom-of-guidance-2017-01-23).

Other indexes: U.K's FTSE 100 fell 0.9% to 7,137.79, and Spain's IBEX 35 lost 0.8% to 9.302.20.

Over the weekend, former French prime minister Manuel Valls and former education minister Benoit Hamon qualified to run in the second stage of the French Socialist Party's presidential primary. Hamon, 49, came in ahead of Valls in voting that took place Sunday.

 

(END) Dow Jones Newswires

January 23, 2017 05:12 ET (10:12 GMT)

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