Forexpros – European stocks traded sharply lower Monday, as ongoing concerns over Greece leaving the euro zone and a political defeat of German Chancellor Angela Merkel ignited the risk off trade.
At the close of European trade, the EURO STOXX 50 tumbled 2.33%, France’s CAC 40 plunged 2.29%, while Germany’s DAX 30 dropped 1.94%.
Fuelling the selling on Sunday, Alexis Tsipras, the head of Greece’s largest anti-bailout party Syriza, rejected calls to join a coalition government, fuelling fears that a fresh round of elections is becoming inevitable and casting the country’s ability to uphold its fiscal commitments into doubt.
Meanwhile, Spanish and Italian government bond auctions saw borrowing costs rise.
In German news, Angela Merkel’s political party lost an election in Germany’s most populous state triggering fears of the Social Democrats unseating Merkel’s political party in upcoming elections.
Spain sold EUR2.9 billion of 12 and 18-month bonds, slightly below its maximum target of EUR3 billion. The yield on the 12-month bonds rose to 2.98%, from 2.62% previously, while the yield on the 18-month bonds increased to 3.3%, from 3.11%.
The Itailian Treasury raised a total of EUR5.25 billion euros, meeting the top of a planned issue range of EUR3.50-5.25 billion euros, at an average 3.91% yield, the highest since January but below market levels of around 4% at the time of the auction.
In other news Monday, official data indicated that industrial production in the euro zone fell unexpectedly in March, adding to fears over the health of the region’s economy.
Eurostat, the European statistics agency said industrial production dipped by a seasonally adjusted 0.3% in March, defying expectations for a 0.4% increase
Financial stocks were broadly hit, as shares in Dutch lender ING Group led losses with shares plunging 6.20% after a weekend report said its rescue by the country’s government will be re-examined by European Union competition regulators after a court overturned earlier approval of the aid.
France’s BNP Paribas and Societe Generale were also sharply lower, tumbling 3.59% and 3.78% respectively, while German Deutsche Bank and Commerzbank dropped 3.51% and 2.25%.
Opap SA, the Greek gambling company, dove 12.48%, after Imerisia reported that the company’s agents have asked for a 30% commission on gross winnings from planned video lottery terminal games.
In bullish news, shares in Holcim, the world’s second-biggest cement maker, rose 0.85% after Chief Executive Officer Bernard Fontana unveiled a planned increase of CHF1.5 billion in operating profit by the end of 2014 by streamlining the purchasing of raw-materials and improving cement factory efficiency.
In London, FTSE 100 spiked lower by 2.09%, as U.K. lenders tracked their European counterparts.
Shares in Barclays gave back 7.39% and Lloyds Banking plunged 5.74%, while the Royal Bank of Scotland and HSBC Holdings saw shares drop 5.14% and 2.45%.
Mining giants Rio Tinto and Bhp Billiton also contributed to losses, with shares tumbling 3.34% and 3.38% respectively, as did copper producers Xstrata and Kazakhmys, down 4.40% and 3.53%.
Meanwhile, Chariot Oil & Gas Ltd. plunged 45.06%, its biggest decline since October 2008, after failing to find hydrocarbons at the Tapir South exploration well offshore Namibia and abandoning the block.
In the U.S., equity markets traded lower with the Dow giving back 0.58%, the S&P 500 falling 0.66, while the tech heavy Nasdaq fell 0.58%.
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