June 16, 2016 / 4:41 PM / 2 years ago

Banks lead European stocks lower as Brexit worries dominate

(ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets for site in development. See the bottom of the report for more details) Adds closing prices, details)

* STOXX 600 falls 0.7 pct after nearing 4-month lows

* UBS and Credit Suisse fall on SNB capital warning

* Deutsche Bank, UniCredit shares touch record depth

By Danilo Masoni and Sudip Kar-Gupta

MILAN/LONDON, June 16 (Reuters) - European shares fell on Thursday, with banking stocks dragging regional equity indexes to touch their lowest point in almost four months in a market dominated by concerns over next week’s British vote on European Union membership.

The risk of Brexit and new signs that interest rates would stay low for longer compounded the uncertainty surrounding the banking sector, already hit by slow growth and expectations of capital increases from southern European lenders.

A warning from the Swiss National Bank that UBS and Credit Suisse would likely each need to raise an extra 10 billion Swiss francs to meet new leverage requirements added to the gloom.

“Regulation once again about to tighten, coupled with low rates for longer across the board, are clearly unsupportive for the banking sector,” said Stephane Ekolo, Chief European Strategist at Market Securities in London.

The pan-European STOXX 600 and FTSEurofirst 300 indexes fell 0.7 and 0.5 percent respectively. The STOXX 600 had fallen earlier to 318.51 points, its lowest intraday point since Feb. 24.

The pan-European bank sector index < .SX7P> was among the biggest sectoral fallers, with a drop of 1.4 percent, while the euro zone bank sector slid as much as 3 percent to touch its lowest point since August 2012.

Shares in UBS and Credit Suisse fell 0.4 and 1.4 percent respectively, while other European bank stocks also underperformed. Deutsche Bank and UniCredit both fell more than 2 percent after touching record lows.

Earlier on Thursday, the SNB kept rates steady, as did the U.S. Federal Reserve earlier this week, with both central banks citing uncertainty surrounding the UK vote.

Although betting odds still point to Britain deciding to stay in the EU, opinion polls have shown growing support for the “Leave” campaign.

Both sides of the debate suspended campaigning in the afternoon after a British Member of Parliament was shot and stabbed in her constituency. She later died from her injuries, police said.

The Fed’s latest policy moves pushed up gold prices, with shares in gold miner Randgold rallying 4.8 percent.

Gold’s relative appeal is enhanced when the Fed decides against raising rates, while its safe-haven status is boosted in times of economic uncertainty. Some traders saw the rising gold price as another sign of worries over Brexit.

Today’s European research round-up

ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

If you have any thoughts, suggestions or feedback on this, please email mike.dolan@thomsonreuters.com.

Mike Dolan, Markets Editor EMEA. ($1 = 0.9634 Swiss francs) (Editing by Catherine Evans)

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