Europe stock dip amid thin trading, US shut for holiday

European stock markets slipped Monday, despite gains earlier in Asia, as investors awaited more clarity on Britain’s future outside the European Union and a U.S. holiday kept trading volumes thin.

KEEPING SCORE: Germany’s DAX fell 0.7 percent to close at 9,709.09 and France’s CAC 40 shed 0.9 percent to 4,234.86. Britain’s FTSE 100 dropped 0.8 percent to 6,522.26. While Wall Street was closed for the Fourth of July holiday, the Shanghai Composite Index rose 1.9 percent to 2,988.60 and Hong Kong’s Hang Seng gained 1.3 percent to 21,059.20. Tokyo’s Nikkei 225 advanced 0.6 percent to 15,775.80 and Sydney’s S&P-ASX 200 gained 0.7 percent to 5,281.80.

POST-BREXIT STIMULUS: Investor sentiment was boosted last week by expectations the Bank of England and European Central Bank might provide monetary stimulus to shore up growth following Britain’s vote and the U.S. Federal Reserve might postpone a rate hike. The top British central banker, Mark Carney, said that some form of stimulus “will likely be required over the summer” because the economic outlook has deteriorated.

EUROPEAN JITTERS: But the momentum in stock markets did not last in Europe, as the prospect of low interest rates for longer has hurt financial stocks. Banks take a hit to their earnings when interest rates are low, because they cannot lend money at higher, more profitable rates. Shares in Italian banks in particular are suffering because of concern about their ability to handle bad loans. There are also concerns about longer-term growth rates in Europe as uncertainty about Britain’s exit lingers.

ANALYST QUOTE: “The recession we now expect in the U.K. will create an external demand shock for the euro area through trade linkages in goods and services,” said Ruben Segura-Cayuela and Gilles Moec, economists at Bank of American Merrill Lynch. They expect “uncertainty spillovers” from the U.K. exit, mainly through lower business investment.

AUSTRALIAN ELECTIONS: Close election results left Australia with the possibility of a hung Parliament. Vote counting was due to resume Tuesday and political analysts said it could be two weeks or more before a result is announced. “Markets will be concerned by the potential for a period of policy paralysis when it comes to budget and economic reform,” Ric Spooner of CMC Markets said in a report.

ENERGY: Benchmark U.S. crude shed 13 cent to $48.86 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 66 cents on Friday. Brent crude, used to price international oils, dropped 18 cents to $50.17 in London. It rose 64 cents the previous session.

CURRENCY: The dollar edged up to 102.51 yen from Friday’s 102.49 yen. The euro rose to $1.1146 from $1.1139, and the pound was roughly flat at $1.3295.