European stocks continue to lose ground

European stocks fell early today, losing ground for the ninth time in 10 sessions and set to post their biggest weekly loss in two months, dragged by deepening worries over the health of the global economy and the euro zone debt crisis.

At 9.43am, the FTSEurofirst 300 index of top European shares was down 0.4 per cent at 896.23 points in relatively thin volumes. The benchmark index has lost about 13 per cent since late October.

Cyclical miners were among the biggest losers, with Xstrata down 1.2 per cent and Antofagasta down 2.8 per cent.

"Investors are spooked by the macroeconomic uncertainties. There's a lack of buyers which is reflected in the anaemic trading volumes," said Fabrice Couste, head of CMC Markets France.

"This market is very technical, and quite difficult for the fund manager who needs to put his money to work. In the short- and medium-term, the only safe haven left seems to be across the Atlantic, in the US T-bills, despite the political deadlock on deficit-reduction measures."

Around Europe, Germany's DAX index was down 0.7 per cent, and France's CAC 40 down 0.5 per cent. Investors were rattled by the lack of consensus between European leaders on how to fight the spreading debt crisis.

German chancellor Angela Merkel said yesterday she would not soften her opposition to issuing joint euro zone bonds - seen by a number of market participants as a solution to the stop the contagion of the debt crisis.

The euro zone's blue chip Euro STOXX 50 index was down 0.5 per cent, at 2,079.01 points, losing ground for the eighth straight session. "The Euro STOXX 50 is in a downward trend which is 'wave 3' of the Elliott wave chart pattern, the most tricky wave to predict. There have been intraday rebounds but they turned out to be 'bull traps'," said Alexandre Le Drogoff, technical analyst at Aurel BGC, in Paris. "The multiple false starts should lead to capitulation, and the year lows will be pierced."

The Elliott wave theory is used to spot repetitive patterns of waves in prices, based on the assumption that the market moves in a direction in a series of five waves and into the opposite direction in a series of three waves.

The banking stock index, which has tumbled 24 per cent since late October, hit a 2.5 year low today, with Société Génerale down 1.2 per cent and Banco Popolare down 1.5 per cent.

The sector, which has a huge exposure to euro zone sovereign bonds, has been hammered by fears over the finances of Greece, Italy and Spain and concerns the crisis could spread to France.

The euro currency sank to a seven-week low against the dollar and was set to weaken further.

Reuters