Markets fall back again as banks retreat

Eurostoxx 50: 2,249.39 (-53.81) Frankfurt DAX: 5,833.97 (-127.47) Paris CAC: 3,075.16 (-68.14)EUROPEAN stocks dropped for the third day in four yesterday after the spread between Italian and German bond yields widened to the most since the introduction of the euro and Italy's credit-default swaps jumped to a record.

HSBC Holdings, Europe’s largest bank, retreated 6 per cent and Dexia slumped 11 per cent as the lender said its shareholder equity shrank because the Belgian government nationalised its unit in the country. Deutsche Post, Europe’s biggest postal service, jumped 3.8 per cent after raising its full-year forecast.

National benchmark indexes fell in all of the 18 western European markets. France’s CAC 40 sank 2.2 per cent and Germany’s DAX retreated 2.2 per cent.

The Stoxx Europe 600 Index fell 1.7 per cent to 236.48. Bank shares fell 3.8 per cent, among the biggest drops of the 19 industry groups in the Stoxx 600, as Greek and Italian lenders slid. HSBC dropped 6 per cent to 505.4 pence, contributing the most to the Stoxx 600’s slide.

Piraeus Bank retreated 6.3 per cent to 25.3 cents and Alpha Bank sank 9 per cent to €1.11.

Dexia, the lender being broken up after running out of short-term funding, plunged 11 per cent to 37.2 cents.

Mediaset, the broadcaster controlled by outgoing Italian prime minister Silvio Berlusconi, tumbled 12 per cent to €2.21 after he offered to resign once parliament approves stability measures.

Legrand sank 4.3 per cent to €24.10. KKR and Wendel completed the sale of 24.3 million shares in the world’s largest maker of wiring devices at €24 apiece, the companies said.

Deutsche Post rallied 3.8 per cent to €11.10.

The company lifted its full-year forecast as increasing express shipments in Asia and parcel volume from internet retailing boosted third-quarter earnings.

Earnings before interest and taxes in 2011 would exceed €2.4 billion , the company said. That compared with an earlier prediction for Ebit at the upper end of a €2.2 billion-€2.4 billion range.

CGGVeritas added 7 per cent to €17.39. The company reported third-quarter net income of $41 million and said it remains “confident” of achieving its full-year objectives. The seismic surveyor made a loss of $33 million in the year-earlier period. – (Bloomberg)