European stock markets were trading mostly lower on Thursday, as a privatization bid by HSBC for its Hong Kong-based subsidiary dragged down the wider banking sector in the region.

The pan-European Stoxx 600 declined by 0.4% and the FTSE 100 in the United Kingdom shed 0.3%.

HSBC, Europe's biggest lender, said it had put forward a proposal to shareholders that would make the entity, Hang Seng Bank, a "wholly owned subsidiary" of its Asia Pacific arm.

Hang Seng, in which HSBC already has a 63% stake, would also be delisted from the Hong Kong Stock Exchange, the lender added.

London-listed shares of HSBC tumbled by more than 5% following the announcement, while the Stoxx 600 banks index, which tracks the broader sector in Europe, dropped by 1.3%.

Attention in the region, which had been partially focused on proposed European Union tariffs on steel imports during the previous session, was also turning back to the ongoing political crisis in France.

French President Emmanuel Macron's office said on Wednesday that he will appoint a new prime minister in the next 48 hours, following the resignation of premier Sebastien Lecornu earlier this week. Lecornu's departure and the failure of his short-lived government, unveiled mere hours after he announced his cabinet line-up, has thrust Europe's second-largest economy back into fresh political turmoil.

Although the chaos has raised speculation around a potential fresh snap parliamentary election, Macron's office has said a majority of lawmakers were against such a move.

The CAC 40 in France was marginally lower by 0.1%, while the DAX in Germany was up around 0.2%.

In individual stocks, shares of Lloyds Banking Group declined after the firm flagged that it may need to set aside more cash to cover expenses related to compensating motor finance customers.

Medical equipment and packaging business Gerresheimer in Germany also dropped after it slashed its full-year financial outlook.

But tech stocks gained, thanks in part to a governance overhaul at France's Alten, which lifted the IT consultancy's stock price. Advances in copper and iron ore prices also boosted Europe's basic resources sector.

Source: Investing.com