Political risk weighs on European stocks

European stocks slid on Tuesday as political risk once again returned to the fore with Italy nearing a deal for early elections and a fresh game of chicken over Greece's bailout keeping investors on edge. "Investors have returned after a long weekend to fresh economic concerns for the eurozone -- centered on problem countries Greece and Italy," said research analyst Henry Croft at Accendo Markets. US stocks also fell modestly following mixed economic data, with the S&P 500 and Nasdaq retreating from Friday's records. Bourses in both London and New York were closed Monday due to holidays. A falling oil price was also seen as a sign that investors have become risk-averse again after weeks of record-breaking market strength. "It wasn't the most glorious of returns from a long weekend in markets," observed Jasper Lawler at London Capital Group. "After a soft start, European market losses accelerated in the afternoon beset by a weak open on Wall Street and rising political risk." Italy's political parties are edging towards a deal that would pave the way for elections in the autumn under a new proportional system. With opinion polls suggesting no stable majority is likely to emerge, investors in Italy took fright, sending the Milan stock exchange two percent lower on Monday. It held steady on Tuesday. "Talk that Italy will spice up Europe's political landscape again with its own snap election is unsettling the idea that Europe is now free of populist risk in 2017," Lawler said. Meanwhile, another impasse between Greece and its creditors over its bailout conditions has raised concerns among investors again. In US markets, the broad-based S&P 500 declined 0.2 percent, with banking, energy and airline shares among the losers. The US Federal Reserve's preferred measure of inflation remained soft in April, despite a modest increase, while consumer confidence slipped for a second straight month in May, according to data released Tuesday. The indicator-rich week culminates Friday with the US jobs report for May. - Amazon hits $1,000 - A notable feature in the New York morning was Amazon's share price going above $1,000 for the first time, before slipping to close just below the milestone level for the online retail giant. British Airways owner IAG saw its share price slide 1.6 percent after a chronic IT crisis sparked thousands of flight cancellations over the busy holiday weekend. Some 75,000 passengers were affected by the computer system outage that caused chaotic scenes at London Gatwick and Heathrow, Europe's busiest airport. "IAG is in the doldrums after a long weekend of chaos at British Airways," noted ETX Capital analyst Neil Wilson. - Key figures around 2100 GMT - New York - Dow: DOWN 0.2 percent at 21,029.47 (close) New York - S&P 500: DOWN 0.1 percent at 2,412.91 (close) New York - Nasdaq: DOWN 0.1 percent at 6,203.19 (close) London - FTSE 100: DOWN 0.3 percent at 7,526.51 points (close) Frankfurt - DAX 30: DOWN 0.2 percent at 12,598.68 (close) Paris - CAC 40: DOWN 0.5 percent at 5,305.94 (close) EURO STOXX 50: DOWN 0.5 percent at 3,561.22 Tokyo - Nikkei 225: FLAT at 19,677.85 (close) Hong Kong - Hang Seng: Closed for holiday Shanghai - Composite: Closed for holiday Euro/dollar: UP at $1.1195 from $1.1164 at 2100 GMT on Monday Dollar/yen: DOWN at 110.76 yen from 111.26 yen Pound/dollar: UP at $1.2862 from $1.2841 Oil - Brent North Sea: DOWN 31 cents at $51.84 per barrel Oil - West Texas Intermediate: DOWN 14 cents at $49.66 per barrel burs-jmb/hs