EUROPE MARKETS: France's CAC Slides As Key Macron Ally Departs, Pulling European Stocks Lower

Queen's Speech in focus as U.K. government races for deal

European stocks marched lower Wednesday, as the energy sector was dragged down by sliding oil prices and as the departure of a key ally of President Emmanuel Macron hit French equities.

The Stoxx Europe 600 lost 0.7% at 386.97, on course for a second straight loss. All sectors were in the red, led by financial and technology shares.

The index tracking European oil and gas stocks was down 0.6% as oil prices moved lower. They slid into a bear market on Tuesday (http://www.marketwatch.com/story/oil-hovers-at-seven-month-low-as-investors-weigh-up-supply-issues-2017-06-20) driven down by continuing worries about a global oil glut as output cuts from the Organization of the Petroleum Exporting Countries were offset by production rises elsewhere. An recent increase in supply by Libya was a factor.

In the oil-producer group, Norway's Statoil ASA (STL.OS) fell 0.8%, Tullow Oil PLC (TLW.LN) lost 0.7%, and France's Total SA (TOT) shed 0.5%.

Among energy equipment and services companies, Petrofac Ltd. (PFC.LN) dropped 2.2% and Italy's Saipem SpA (SPM.MI) was off 1.5%, but Subsea 7 SA (SUBC.OS) rose 3.1%.

A weekly supply update from the Energy Information Administration is due at 10:30 a.m. Eastern Time Wednesday. Analysts polled by S&P Global Platts expect the EIA to report a decline of 2 million barrels in crude inventories. Late Tuesday, the American Petroleum Institute reported a weekly decline of 2.7 million barrels in U.S. crude supplies (http://www.marketwatch.com/story/api-data-show-a-weekly-decline-in-us-crude-supply-sources-say-2017-06-20).

France battered: France's CAC 40 index lost the most ground among major benchmarks as it dropped 1% to 5,240.62, with just three components moving higher.

The market was under pressure after the country's Justice Minister François Bayrou left government Wednesday (http://www.marketwatch.com/story/frances-justice-minister-a-key-macron-ally-quits-government-2017-06-21). Bayrou was a key ally who rallied centrists to Macron's successful election campaign.

Bayrou's centrist party Mouvement Démocrate, or MoDem, is in a preliminary probe into allegations related to jobs at the European Parliament. Bayrou was reportedly set to give a press conference later Wednesday.

The CAC's biggest decliners were hospitality services company Sodexo SA (SW.FR) , down 2.7%, and AXA SA (AXAHY) , 2.6% lower. But industrials metals company ArcelorMittal SA (MT) picked up 1%.

Individual indexes: Germany's DAX 30 shed 0.3% to 12,717.03, backing further away from Monday's record close. Spain's IBEX 35 was off 0.7% at 10,669.

In London, the FTSE 100 was down 0.3% at 7,448.24, with financial, oil and gas and consumer-goods shares lower.

Meanwhile, the pound dropped below $1.26 before the formal opening of parliament, when Queen Elizabeth II will set out the government's agenda in a speech. However, Prime Minister Theresa May's plan to form a government with the support of the Democratic Unionist Party looked in doubt, after media reports cast doubt (http://www.telegraph.co.uk/news/2017/06/21/theresa-mays-deputy-damian-greencasts-doubt-dup-deal/?utm_source=dlvr.it&utm_medium=twitter) on her Conservative Party's prospects of sealing a deal with the party from Northern Ireland.

Coverage of the Queen's Speech will begin at 11:15 a.m. London time (http://www.parliament.uk/business/news/2017/june/state-opening-of-parliament-2017/), or 6:15 a.m. Eastern Time.

Stock movers: Whitbread PLC shares (WTB.LN) climbed 4.5% to top the Stoxx 600. The parent company of the Costa Coffee and Premier Inn hotels chain posted a rise of 2.9% in fiscal first-quarter comparable sales (http://www.marketwatch.com/story/whitbread-quarterly-same-store-sales-rise-2017-06-21). Total sales rose 7.6%.

Provident Financial PLC (PFG.LN) sank 16% after a warning about adjusted profit from the credit company.

(END) Dow Jones Newswires

June 21, 2017 05:44 ET (09:44 GMT)