European stocks posted the biggest weekly drop in three months, with banks leading declines amid concern the region’s economy is slowing as the sovereign-debt crisis curbs growth.
Allied Irish Banks PLC slid 12 percent after Ireland’s government announced plans to take majority control of the lender. Michelin & Cie, the world’s -second-largest tiremaker, tumbled 15 percent after saying it plans to raise 1.2 billion euros (US$1.7 billion) in a rights offering. Hennes & Mauritz AB, Europe’s second-biggest clothing retailer, slumped 6.5 percent as third-quarter profit missed analysts’ estimates.
The STOXX Europe 600 Index lost 1.9 percent to 259.09 this past week, the most since July 2. The regional gauge is 4.8 percent below this year’s high in April amid speculation that economic growth will slow as European nations slash spending to rein in their budget deficits. The cost of insuring against default on Ireland’s government debt surged to a record this week, signaling deterioration in the country’s creditworthiness.
Expansion in Europe’s manufacturing industry slowed last month and export orders weakened as a cooling global recovery restrained demand.
National benchmark indexes declined in 14 of the 18 western European markets this week. France’s CAC 40 and Germany’s DAX lost 2.4 percent and 1.4 percent respectively. The UK’s FTSE 100 Index slipped 0.1 percent.
The VSTOXX Index, which measures the cost of protecting against declines in the Euro STOXX 50 Index, surged 11 percent, the most since June.
European banking shares posted the worst performance among 19 industry groups in the STOXX 600 this week, losing 4.5 percent.