By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets slumped on
Wednesday, with banks leading the charge south, following a major
setback in week-long attempts to form a government in Italy.
The Stoxx Europe 600 index dropped 0.8% to 291.51, after opening
in positive territory.
The turnaround was sparked by comments from Italy's Democratic
Party leader Pier Luigi Bersani, who said he wouldn't attempt to
put together a government, after struggling to form a coalition
since inconclusive parliamentary elections in late February.
Bersani was quoted as saying that only an "insane" person would
want to govern the country in the current environment and that
Italy is in a "mess."
The FTSE MIB index fell 1.4% to 15,272.11, with banks posting
some of the biggest losses. Banca Popolare di Milano Scarl lost
3.6%, while UniCredit SpA dropped 2.3%.
Further of interest in Italy, the Treasury sold 6.91 billion
euros ($8.8 billion) in debt, with five-year borrowing costs rising
to a five-month high, according to Dow Jones Newswires.
On the euro-zone data front, the Economic Sentiment Indicator
fell to 90.0 in March from 91.1, the first decline since October
last year.
Most banking shares in Europe were mired in the red, following
days of uncertainty over the stability of the Cyprus banking
system. The island nation earlier in the week agreed to a bailout
package including a levy on bank deposits above EUR100,000, fueling
fears that the measures could set a precedent for solving future
banking crises in other euro-zone countries.
Cypriot authorities were planning to reopen the country's banks
on Thursday, but customers could find their access to money
limited. The country was expected to impose capital controls to
keep depositors from taking money out of the country in efforts to
avoid a bank run. The Cyprus Stock Exchange was also closed for
trading until Thursday. Read: Three ways for Europe to regain
control of its crisis--Nomura
Greece's ATHEX Composite sank 4.8% to 842.07, with shares of
Hellenic Telecommunications Organization SA 7.7% lower. The company
said that its deposits in three of the largest Cyprus banks amount
to EUR3 million.
In Spain, shares of Banco Santander SA (SAN) dropped 2.9% and
BBVA SA (BBVA) fell 2%. The IBEX 35 index traded 2% lower at
7,828.50.
In France, BNP Paribas SA slumped 3.1%, Crédit Agricole SA
dropped 1.9% and Société Générale SA fell 2.9%.
Also in Paris, shares of European Aeronautic Defence & Space
Co. (EADSY) shed 3.3%, after French media group Lagardere SCA Chief
Executive Arnaud Lagardère said in a report in the French daily Les
Echos that the firm will sell its 7.5% stake in the Airbus owner.
Lagardère fell 1.4%.
The CAC 40 index declined 1.6% to 3,688.15.
Germany's DAX 30 index fell 1.4% to 7,767.75. Shares of Allianz
SE declined 3.1%, as the insurer said it would buy 94% of Yapi
Kredi Sigorta, an insurance unit of Yapi Kredi, Turkey's fourth
largest private bank by assets.
the U.K.'s FTSE 100 index moved 0.7% lower to 6,355.58, with
energy firms tracking oil prices lower. Shares of BP PLC (BP) lost
0.4% and Royal Dutch Shell PLC (RDSB) dropped 0.8%.
U.S. stocks fell on Wall Street. Data showed pending-home sales
declined 0.4% in February, although longer-term trends showed
continuing growth.
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