European stocks fell for a fourth week, the longest losing streak since July, amid concern that Greece, Spain and Portugal will struggle to curb their budget deficits.
Allied Irish Banks PLC and Banco de Valencia SA led bank shares to the biggest decline among 19 industry groups in the Dow Jones STOXX 600 Index this week. Xstrata PLC and Rautaruukki Oyj both sank more than 7 percent as copper retreated for a fourth week. Neste Oil Oyj slumped 9.8 percent after Finland’s only oil refiner posted a fourth-quarter net loss. Electrolux AB tumbled 13 percent after fourth-quarter earnings missed analysts’ estimates.
The Dow Jones STOXX 600 Index dropped 3.9 percent to 237.46 this week, the lowest level in three months. Stocks in Spain and Portugal slumped the most in 15 months on Thursday on concern they would struggle to shrink their budget shortfalls. Credit-default swaps on the sovereign debt of those countries rose to record high levels on Friday, according to CMA DataVision prices.
“European markets are being rocked by the sovereign debt contamination emanating from Greece and arriving in Portugal and Spain,” said Neil Dwane, who helps oversee about US$80 billion as chief investment officer at Allianz Global Investors’ RCM unit in Frankfurt. “Country contagion risk now seems real. Governments without a credible economic plan will be punished by higher borrowing costs which may then result in a double dip, or worse, for the economies concerned.”
The STOXX 600 has fallen 6.5 percent so far this year, as US President Barack Obama proposed limits on risk-taking at banks and China moved to cool its economy. The gauge, which is still up 50 percent since March, is 3.23 points away from entering a correction, defined as a 10 percent drop from a recent high. The measure reached 260.26 on Jan. 19.
National benchmark indexes fell in all 18 western European markets except Iceland. The UK’s FTSE 100 retreated 2.5 percent, while Germany’s DAX fell 3.1 percent and France’s CAC 40 slid 4.7 percent.
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PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
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