European shares slip from peak as Trump's credit card fee cap plan rattles banks

By Niket Nishant

Jan 12 (Reuters) - European shares eased from record highs on Monday, as U.S. President Donald Trump's call for a cap on credit card interest rates weighed on banks, while tensions between the Trump administration and Federal Reserve Chair Jerome Powell kept global markets on the edge.

These developments added another layer of uncertainty to a market that is already grappling with a host of geopolitical risks, including the U.S. capture of Venezuela and violence in Iran.

The pan-European STOXX 600 .STOXX slipped 0.2% by 1033 GMT.

Banks .SX7P dipped 0.4%, with UK lender Barclays BARC.L leading the declines, down 3.2%. Barclays' U.S. card operations are the ninth biggest in the market and account for around 11% of group profits, according to Hargreaves Lansdown senior equity analyst Matt Britzman.

Trump on Friday called for a one-year cap on credit card interest rates at 10%, starting on January 20, but did not provide details.

"A 10% ceiling on credit-card rates, roughly half today's average interest rate, would upend the basic economics of the industry, forcing lenders to rethink how they manage risk and who they're willing to lend to," said Britzman.

Investors also fled to safe-haven assets after Trump's officials threatened to indict Powell over comments to Congress about a building renovation project. Powell said it was an attempt to influence interest rates.

Most major regional markets in Europe dipped, along with U.S. stock futures. Germany's DAX .GDAXI bucked the trend, rising 0.2% to a record high and on track for its first 10-day winning streak since August 2024.

The Sentix index measuring investor morale in the euro zone rose more than expected at the start of the year, hitting its highest level since July 2025 due to improved expectations, though it still remained in negative territory, a survey showed.

Shares of French biotech Abivax ABVX.PA surged 25% and hit their highest in nearly two weeks after a media report said U.S. pharma giant Eli Lilly LLY.N was still interested in buying the company.

The Netherlands-based biopharma Argenx ARGX.BR fell 2.4% after announcing preliminary sales for 2025.

AstraZeneca's AZN.L shares were flat, after the company ceded its spot in the prestigious Nasdaq-100 index to retail giant Walmart WMT.N.