Bourses hit six-week low on euro zone debt fears

Eurostoxx 50: 2,242.78 (-25.18) Frankfurt DAX: 5,850.17 (-63.19) Paris CAC: 3,010.29 (-54.61)EUROPEAN SHARES hit their six-week closing low yesterday on concerns that a debt crisis in the euro zone will spiral out of control, after Spain and France paid a higher price at their debt auctions.

The FTSEurofirst 300 index of top European shares provisionally ended 1.3 per cent lower at 957.62.

The drop came after Spain and France saw their borrowing costs rise at bond auctions earlier in the day, reflecting increased uneasiness about the countries’ public finances and dissatisfaction at the policy response from the authorities.

“The market is still worried about the implementation of all these austerity and anti-crisis] measures, which are not detailed enough to be credible,” JPMorgan-Cazenove strategist Emmanuel Cau said.

Banking stocks underperformed, with the sector gauge, down 2.2 per cent, declining for a fourth session on the trot to close at levels not seen since October 4th, while basic resources index and automobiles also bore the brunt of the depressed sentiment, down 3.4 and 2.3 per cent, respectively.

BNP Paribas and Société Générale led a sell-off in banks, both dropping at least 3 per cent as dollar funding costs for European lenders climbed to a three-year high. Crédit Agricole lost 4.4 per cent to €4.44, while Deutsche Bank fell 3.7 per cent to €27.30.

Mining companies tumbled with metal prices. Antofagasta paced a sell-off in mining shares, falling 5.2 per cent to 1,113 pence, while Vedanta Resources lost 5.1 per cent to 1,033 pence and Xstrata retreated 3.2 per cent to 966.1 pence. – (Reuters/Bloomberg)