German Chancellor Angela Merkel sought to ease fears over a possible Greek bankruptcy, saying the 17-country eurozone had to stick together and that an “uncontrolled insolvency” must be avoided.
US President Barack Obama warned overnight that the world economy would remain weak until the eurozone crisis was solved, as market anxiety mounted over debt woes in Greece, Spain and Italy.
The Paris CAC 40 tumbled 1.61 percent to 2,806.39 in afternoon deals, London s FTSE 100 stocks index dropped 0.63 percent at 5,097.90 points and in Frankfurt the DAX 30 index slid 0.20 percent to 5,062.22. Madrid lost 0.52 percent and Milan fell 0.17 percent.
Shares in French banks plummeted again amid rumours that China was refusing to buy Italian government bonds, dealers said. BNP Paribas, the bank most exposed to Italian debt, plunged by nearly 10.0 percent in early trading on the Paris stock exchange, with Societe Generale down by 4.0 percent.
Italy meanwhile placed bonds worth close to 6.5 billion euros ($8.8 billion) on Tuesday but the yield it had to offer reached a new high level, the Bank of Italy said, revealing a marked lack of investor confidence.
In foreign exchange trade, the euro dropped below $1.36 but was off 10-year lows against the yen struck on Monday.
Speaking to German radio station RBB on Tuesday, Merkel said “the top priority is to avoid an uncontrolled (Greek) insolvency, because that would not just affect Greece, and the danger that it hits everyone or at least several countries is very big.”
She stressed that the eurozone had to remain intact, hinting that if Greece were to leave the group, others would swiftly follow. “I have made my position very clear that everything must be done to keep the eurozone together politically. Because we would soon have a domino effect,” said the chancellor.
Source: http://www.latestcnnnews.com/european-stocks-down-on-second-consecutive-day.html
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