Banks sell-off weighs on European markets

Eurostoxx 50:2,730.86 (–64.21) Frankfurt DAX:7,149.44 (–128.75) Paris CAC:3,787.79 (–83.58)

EUROPEAN STOCKS sank yesterday as banks led a sell-off after Federal Reserve chairman Ben S Bernanke cut his growth forecast for the world’s largest economy.

The Stoxx Europe 600 Index dropped 1.4 per cent.

The gauge has tumbled 9.2 per cent from this year’s peak as US economic data trailed forecasts and concern mounted that Greece will fail to repay all its debt.

The measure is on course for an eighth consecutive week of losses, the longest stretch of declines since 1998.

Mr Bernanke’s “providing a strong message, we are seeing a very slow second half of the year recovery,” Patrick Legland, the global head of research at Société Générale said.

“Markets are extremely worried because we lack the political will at this stage” to solve the debt crisis in Europe, he said.

European Union leaders began a two-day summit in Brussels yesterday to discuss Greece’s financing needs as the nation attempts to avert a default.

Banks were the worst performing of the 19 industry groups in the Stoxx 600, sliding 2.6 per cent.

BBVA, Spain’s second-largest lender, declined 5.5 per cent to €7.57.

Italy’s Dexia lost 5.4 per cent to €2.06.

Bayer slumped 6.3 per cent to €54.40, its largest drop since March 2009.

Mediaset tumbled 6.7 per cent to €3.10, the lowest close since its initial public offering in 1996.

The company said advertising sales in Italy will decline as much as 5 per cent in the first six months.

Energy shares slumped, with every company in the Stoxx 600 Oil and Gas Index falling.

Total sank 1.6 per cent to €37.97 and BP dropped 2.2 per cent to 435.5p.

Crude plunged to a four-month low of $90.65 a barrel in New York. The International Energy Agency said it will release 60 million barrels of oil from emergency stockpiles, the third time the agency has co-ordinated the use of emergency reserves since its founding in 1974.

STMicroelectronics tumbled 5.6 per cent to €6.44 as its chipmaking joint venture with Ericsson, ST-Ericsson, pushed back the date at which it expects to become profitable. – (Bloomberg)