European stocks dropped for a fourth week, the longest streak of losses since August last year, as concern resurfaced about the region’s debt crisis and economic reports in China and the US missed estimates.
Societe Generale SA and UniCredit SpA sank more than 8 percent as banks led losses on the STOXX Europe 600 Index this week. Banco Espirito Santo SA tumbled 13 percent as it announced a share sale. Nokia Oyj slumped 21 percent after reporting an operating loss for its mobile-phone division and forecasting that earnings would not recover this quarter.
The STOXX 600 lost 2.2 percent to 253.4 as China’s economy slowed more than forecast and a US report showed employers added fewer jobs last month than estimated. The gauge has still climbed 3.6 percent this year as the European Central Bank (ECB) disbursed more than 1 trillion euros (US$1.3 trillion) to the region’s lenders through its longer-term refinancing operation, or LTRO.
“Despite the intervention of the European authorities in the form of the LTRO, concerns have now spread to Spain,” said Richard Hunter, the head of equities at Hargreaves Lansdown PLC in London. “In the US, last week’s jobs numbers provided a hangover, which has been difficult to shake off.”
Borrowing costs topped 6 percent this week in Spain, nearing the 7 percent level that prompted Greece, Ireland and Portugal to seek bailouts. The cost of insuring against a Spanish government default rose to a record today, according to comparative market analysis prices for credit-default swaps.
“Spain is not going to be rescued,” Spanish Prime Minister Mariano Rajoy said on Thursday. “It’s not possible to rescue Spain, there’s no intention to.”
ECB Governing Council member Klaas Knot said that officials are far from reviving their program of purchasing government bonds.
“I think that we are very far from that situation, the instrument hasn’t been used for some time, but it’s still there, I hope we never have to use it again,” Knot said at an event in Amsterdam on Friday, when asked about the need for the ECB to purchase government bonds.
He also said that another three-year loan probably would not be needed.
National benchmark indices fell in all 18 Western European markets, except Iceland and Greece. The UK’s FTSE 100 slid 1.3 percent, Germany’s DAX dropped 2.8 percent and France’s CAC 40 declined 3.9 percent, the most this year.
Italy’s FTSE MIB and Spain’s IBEX 35 posted the biggest declines, losing 5.6 percent and 5.4 percent, respectively. The IBEX 35 closed at the lowest level since March 2009.