June 7, 2017 / 7:57 AM / 2 months ago

European stocks supported by banks, utilities before UK election

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FILE PHOTO: A man shelters under an umbrella as he walks past the London Stock Exchange in London, Britain August 24, 2015.Suzanne Plunkett/File Photo

LONDON (Reuters) - Banks and utilities supported European stocks on Wednesday, with relief that Spain's struggling Banco Popular POP.MC was being rescued by Santander (SAN.MC) lifting bank shares.

The STOXX 600 index fell 0.1 percent, weighed down by a late drop in energy stocks. Crude oil prices plunged after data showed U.S. stocks of crude oil and gasoline surprisingly rose last week.[O/R]

Britain's FTSE 100 .FTSE index fell 0.6 percent and Germany's DAX .GDAXI inched 0.1 percent.

Although shares in Santander fell 0.9 percent in choppy trade and Banco Popular's were suspended, European banks .SX7P were among the standout performers, gaining 0.7 percent. Santander said it would buy Popular and carry out a capital increase of around 7 billion euros ($7.9 billion).

"As a stand-alone bank, (Popular) was close to failing ... and the failure of any bank, as we've seen in the past, can set of that chain of events where the whole banking sector gets freaked out, investors especially," said Mike van Dulken, head of research at Accendo Markets.

Spain's Bankia (BKIA.MC), Italy's UniCredit (CRDI.MI) and France's Societe Generale (SOGN.PA) were all up between 1 percent and 4.9 percent.

European utilities .SX6P also gained, led by Germany's E.ON (EONGn.DE) and RWE (RWEG.DE). Both rose more than 5 percent after the country's highest court declared a nuclear fuel tax illegal, enabling them to claim back 6 billion euros in cash.

Shares in Swedish biometric firm Fingerprint Cards (FINGb.ST) were the top STOXX risers, jumping 11.6 percent, after confirming an order for its sensors.

On the downside, Covestro (1COV.DE) dropped 4.6 percent after Bayer (BAYGn.DE) cut its stake in the plastics maker to 44.8 percent from 53.3 percent.

Investors were also looking ahead to the British election on Thursday, as well as the European Central Bank's policy meeting.

"Whatever the outcome on Friday morning, markets actually have very little to go on to be able to judge whether such a new government would be more or less successful in negotiations with the EU," Don Smith, chief investment officer at Brown Shipley, said in a note.

"We are unlikely to see anything like the huge fluctuations in markets that occurred in the immediate wake of last summer’s referendum," Smith added, referring to the Britain's vote last June to leave the European Union.

Additional reporting by Danilo Masoni; Editing by Hugh Lawson and Alexander Smith

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