European stocks fell for an eighth week, the longest stretch of losses since 1998, as concern grew that Greece will default and the US Federal Reserve cut its growth forecast for the world’s largest economy.
The STOXX Europe 600 Index declined 1.2 percent to 263.98 this past week, the lowest level since March 16, even after Greek Prime Minister George Papandreou won a confidence vote in his government. The gauge has fallen 9.3 percent since its high on Feb. 17 as US economic data trailed forecasts and concern about Europe’s debt crisis depended.
“The Greek situation turned from fluid to erratic this week,” Christian Gattiker, Zurich-based head of research at Bank Julius Baer & Co, wrote in a note to clients. “The confidence vote in Greece triggered nothing but a short-term countermove.”
National benchmark indexes fell in all 18 western European markets this week. The UK’s FTSE 100 declined 0.3 percent, Germany’s DAX slipped 0.6 percent and France’s CAC 40 fell 1 percent. Italy’s FTSE MIB plunged 4.7 percent, the most in more than a year.
The STOXX 600’s decline has dragged its valuation to 12.5 times the reported earnings of its companies, the cheapest since 2008, Bloomberg data show.
A gauge of banks was the worst performing industry in the STOXX 600 this week, sliding 4.3 percent to the lowest level since July 2009.
Popolare Milano, the oldest Italian cooperative bank, plunged 15 percent to the lowest since at least 1989. Monte Paschi slid 11 percent, the biggest drop in more than a year.
Moody’s Investors Service said on Thursday that it may downgrade 13 Italian banks because they would be vulnerable were the government’s credit rating to be cut.
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