Euro zone debt worries drag down Europe shares

* FTSEurofirst 300 falls 1.3 pct after two days of gains

* Persistent euro zone debt crisis keeps investors nervous

* Financials, miners among biggest decliners

By Atul Prakash

LONDON, Nov 26 (BestGrowthStock) – European shares retreated on
Friday, pressured by banks and miners, as concerns about the
euro zone debt crisis lingered and investors speculated other
peripheral countries may also seek financial help.

Financial shares featured among the biggest losers, with the
STOXX Europe 600 banking index (.SX7P: ) falling 2.9 percent. Bank
of Ireland (BKIR.I: ), Bankinter (BKT.MC: ) and BNP Paribas
(BNPP.PA: ) fell 3.1 to 4.6 percent.

At 1213 GMT, the FTSEurofirst 300 (.FTEU3: ) index of top
European shares was down 1.3 percent at 1,078.96 points after
falling to a low of 1,077.51 earlier in the session.

Portuguese and Spanish bonds rose on growing concerns about
the debt crisis. The Financial Times Deutschland said the
majority of euro zone states and the European Central Bank were
urging Portugal to apply for a financial bailout.

But European officials denied the report and Spain ruled out
needing help to manage its finances, despite concerns that the
debt crisis could spread from Ireland. [ID:nLDE6AP08Y]

“It’s difficult not to remain nervous. The focus will stay
on Europe, certainly for the early part of the next week. We may
see that move across the United States once we see U.S. non-farm
payrolls figures late next week,” said Keith Bowman, analyst at
Hargreaves Lansdown.

“The problem in Ireland is the political situation. Markets
would be slightly calmer if they could see that this bailout is
going to be carried through by politicians. But a potential
change of government is making everyone nervous.”

Ireland’s government is likely to see its parliamentary
majority cut to two, less than two weeks ahead of a crucial vote
on next year’s austerity budget. Sources said an 85 billion euro
($112.7 billion) rescue package for Ireland from the EU and the
International Monetary Fund would likely be announced on Sunday.

“The bailout remains highly uncertain as parts of the Irish
government may yet withdraw support, putting the rescue in
jeopardy,” said Stefan Angele, head of investment management at
Swiss & Global Asset Management.

Britain’s FTSE 100 (.FTSE: ), Germany’s DAX (.GDAXI: ) and
France’s CAC40 (.FCHI: ) fell 1.2 to 1.6 percent. Spain’s IBEX
(.IBEX: ) fell 2.7 percent, while the Thomson Reuters Peripheral
Eurozone Countries Index (.TRXFLDPIPU: ) was down 2.9 percent.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

TAKE A LOOK- Europe’s debt problems [nLDE68T0MG]

Euro zone debt struggle http://link.reuters.com/dah65q

Multimedia on Euro zone crisis http://r.reuters.com/hus75h

EU bailout graphic http://link.reuters.com/fac76q

Euro zone debt graphic http://r.reuters.com/hyb65p

Interactive timeline http://link.reuters.com/nyx95q

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

VOLATILITY

Appetite for riskier assets fell sharply, with the VDAX-NEW
volatility index (.V1XI: ), a key European barometer of investor
anxiety, surging more than 15 percent to a 7-week high. The
higher the index, the lower investors’ appetite for risk.

Technicals also turned bearish as the Euro STOXX 50
(.STOXX50E: ), the euro zone’s blue-chip index, fell 1.9 percent
to 2,714.26 points to hover below its 50-percent Fibonacci
retracement of a fall from a high in April to a low in May.

The level had provided some support in recent sessions. The
next support levels are seen at 2,669.29 — a 38.2 percent
retracement level — and at October’s low of 2,690.88.

Miners felt the pinch as metals prices fell sharply on a
stronger euro. BHP Billiton (BLT.L: ), Anglo American (AAL.L: ) and
Antofagasta (ANTO.L: ) fell 2.6 to 4.3 percent.

Geopolitical concerns also weighed on markets. North Korea
said impending military exercises by South Korea and the United
States were pushing the region towards war. [ID:nL3E6MQ058]
On the upside, BT (BT.L: ) rose 3.1 percent as the British
telecoms company said it sold a 5.5 percent stake in Indian IT
services group Tech Mahindra (TEML.BO: ). [ID:nLDE6AP0OV]

($1=.7540 Euro)

(Editing by David Hulmes)

Euro zone debt worries drag down Europe shares