Sun, Feb 10, 2013 - Page 6 News List

European stocks decline as crisis concern returns


European stocks posted a second weekly decline as political uncertainty in Italy and Spain revived concern that the nations’ austerity programs may falter and the eurozone debt crisis may deepen.

The benchmark STOXX Europe 600 Index lost 0.3 percent to 287.34 this past week. The gauge has still advanced 2.7 percent so far this year as US lawmakers agreed on a tax-increase deal, delayed spending cuts and avoided a fiscal deadlock that threatened to push the world’s largest economy into a recession.

“The return of uncertainty relating to the eurozone has contributed to increased volatility in European equities and a very weak performance of sectors,” said Jeremy Batstone-Carr, head of research at Charles Stanley Group PLC in London. “Banks are hugely vulnerable to a still very fragile banking system which is likely to be put under only more pressure if bond yields keep rising, which they are likely to.”

The VSTOXX Index, which measures the expected volatility in the region through Euro STOXX 50 Index options prices, surged 16 percent this week. The average daily volume of shares trading on companies in the STOXX 600 was 14 percent higher than the mean of the last 12 months.

Spain is in a turmoil over reports by the newspaper El Pais that Spanish Prime Minister Mariano Rajoy received more than 277,000 euros (US$375,000) from a secret fund run by the former treasurer of his People’s Party. Rajoy said on Feb. 2 that he was the victim of a smear campaign.

The IBEX 35 Index fell 0.8 percent this week.

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