Italy stock market plummets 1.62% on Fiat, Telecom sell-offs

Fiat -3.11% on Chrysler merger, Telecom -4.62%

(ANSA) - Milan, August 5 - Italy's FTSE-Mib index declined 1.62% to close at 20,052 points Tuesday, touching lows not seen since March, ahead of what are likely to be disappointing second-quarter GPD figures to be released Wednesday, analysts said. Also dragging the market down was a sell-off in shares of Fiat, which plunged 3.11% to close at 6.84 euros a share.

The carmaker has shed 12% since shareholders approved a merger with Chrysler auto maker last week, and dropped by more than 7% at one point during trading Tuesday, triggering speculation as to the cause. While some suggested the sell-off could be related to a Chinese investigation of trading practices in the auto industry, others speculated that it might have been driven by Fiat shareholders who disapproved of the merger that created the new Fiat Chrysler Automotives (FCA) and were cashing out.

Last Friday, the majority of Fiat shareholders approved the merger deal that also allowed those who opposed the deal to sell their shares at a premium during a 15-day window which opened Tuesday. But in its statement, Fiat said it had not yet received any notification that shareholders were exercising their right to sell at 7.727 euros a share, well above the trading price.

By mid-afternoon Tuesday, Fiat shares recovered enough to trade at about 6.79 euros or 3.89% below the previous day's close. The market also suffered from a sell-off in shares of Telecom, which plummeted 4.62% after Spain's Telefonica announced plans to sell its 8.3% stake in the Italian company to Vivendi SA. Most other European stock exchanges posted gains, with London closing up 0.07%, Paris adding 0.37% and Frankfurt rising by 0.39%.