after Asian share indices fell back off 2-year highs.
Sterling,
hammered by a slump for Prime Minister Theresa May's Conservatives in opinion
polls last week, recovered some ground after weekend numbers confirmed the
trend but showed her still on course to win next week's vote.
European
share prices were a touch lower [.EU], led by a half-percent fall in banking
shares as worries over recapitalizations of regional Italian lenders bled over
into a second week.
Weekend
reports that Italy's main parties could converge on a proportional electoral
law also pointed to growing chances of an early election that carries the risk
of a win for the anti-establishment 5-Star movement.
"If
approved, the new law could significantly increase the chances of a vote in the
autumn ... It remains to be seen what the chances of a stable parliamentary
majority will be," one trader said.
European blue
chips .STOXXE eased 0.2 percent, with Italy's Banco BPM (BAMI.MI) and Unicredit
(CRDI.MI) both down around 2 percent. Germany's DAX .GDAXI was little changed.
Asian
markets were lower overall after some early gains that largely shrugged off
another missile launch by North Korea, the broad MSCI index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS dipping 0.2 percent.
Japan's
Nikkei .N225 edged up 0.2 percent while Australian shares fell as much as 0.8
percent, hit by another round of falls in the prices of oil and other
commodities. China's markets are also closed on Monday and Tuesday for a
holiday.
South
Korea's KOSPI .KS11 added 0.4 percent to touch a record high and was on track
for its seventh straight day of gains.
"There
are not many negative factors in the market for the KOSPI, and demand seems
still strong enough to push the index up a bit more," said Kim Ji-hyung, a
stock analyst at Hanyang Securities.
On currency
markets, the dollar was broadly flat, trading at $1.1180 per euro and 111.34
yen after steadying on a better batch of U.S. economic data on Friday that
solidified expectations of a rise in official interest rates next month.
San
Francisco Federal Reserve President John Williams said in Singapore on Monday
that medium-term trends in U.S. inflation remained "pretty
favorable," despite some recent soft consumer price data.
After
falling more than 2 cents last week, sterling was 0.25 percent stronger against
the dollar GBP= and euro EURGBP=.
"A lot
of what we are seeing is the after effects of Friday's news and data
releases," said Thu Lan Nguyen, a currency strategist with Commerzbank in
Frankfurt.
"We
have a little bit of dollar strength following better U.S. data and some
hawkish comments from Federal Reserve officials. And we have a little bit of a
pound recovery following the latest poll results from the UK."
REUTERS
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