European shares hit 10-week low on euro zone fears

By Atul Prakash

LONDON (BestGrowthStock) – European shares hit 10-week lows on Friday after hefty falls in the previous day, with growing worries about sovereign debt situation in the euro zone and anxiety ahead of a key U.S. jobs data hurting sentiment.

At 4:25 a.m. EST, the FTSEurofirst 300 (.FTEU3: ) index of top European shares was down 1.3 percent at 980.51 points after touching 977.02 — the lowest since late November of last year. The index slipped 2.8 percent in the previous session, its biggest one-day percentage fall in 10 weeks.

Investor appetite for risky assets such as equities fell, with the VDAX-NEW volatility index (.V1XI: ) rising 5 percent to a two-month high. The higher the index, which is based on sell and buy options on Frankfurt’s top-30 stocks (0#.GDAXI: ), the lower the market’s desire to take risk.

Banks were among the top losers, with Standard Chartered (STAN.L: ), Barclays (BARC.L: ), Lloyds (LLOY.L: ), Royal Bank of Scotland (RBS.L: ), BNP Paribas (BNPP.PA: ), Commerzbank (CBKG.DE: ) and Societe Generale (SOGN.PA: ) falling 0.7 to 3.6 percent.

“There is now significant downside pressure on global indexes, with fear spreading that the situation in Greece could creep in to other weaker European economies,” said Owen Ireland, analyst at ODL Securities.

“Confidence is extremely brittle. Today’s nervousness could well be magnified by the release of the U.S. non-farms this afternoon,” he added.

Global stock markets suffered this week on fears that troubles in Greece and other southern members of the euro zone, including Portugal and Spain, could impede or even derail an economic recovery that helped equities surge in 2009.

The Greek prime minister tried to calm investor fears about the creditworthiness of his government after euro zone debt woes provoked a rare direct policy response from the Swiss central bank, which intervened in its own name in Asian foreign exchange trading to weaken its currency against the euro.

The Portuguese government’s defeat over a regional finance bill, a climbdown by the Spanish government over pension reform, and protests by Greek tax officials have added to the woes of states struggling to cut budget deficits bloated by recession.

Greek stocks (.ATG: ) fell 2.3 percent, with National Bank (NBGr.AT: ), the country’s largest lender, falling 2.4 percent and Alpha Bank (ACBr.AT: ) down 1.9 percent.

Spain’s main share index Ibex (.IBEX: ) fell 1.5 percent, while major banks Santander (SAN.MC: ) and BBVA (BBVA.MC: ) dropped 1.8 percent and 2.1 percent respectively.

MINERS SLIP, DATA EYED

Miners also came under pressure as copper prices fell 1.3 percent, aluminum was down 0.8 percent and nickel slipped 2.7 percent.

BHP Billiton (BLT.L: ), Anglo American (AAL.L: ), Antofagasta (ANTO.L: ), Rio Tinto (RIO.L: ), Xstrata (XTA.L: ) and Eurasian Natural Resources (ENRC.L: ) fell 1.5 to 3.4 percent.

“It’s clear that the (stock) market is shifting from extremely risk-loving to once again becoming risk-averse and this is an environment to be extremely cautious,” said Philippe Gijsels, senior equity strategist at BNP Paribas Fortis.

“We are clearly in a correction mode. If U.S. job figures are good, the market could see some bounce from oversold levels.”

An unexpected increase in U.S. unemployment claims data on Thursday made investors nervous ahead of the non-farm payroll numbers, due at 1330 GMT. The jobs numbers will be closely watched by markets given its implications for consumer demand in the world’s biggest economy.

Among individual movers, ICAP (IAP.L: ), the world’s biggest inter-dealer broker, sank 18 percent to its lowest level in more than 10 months after the company said full-year earnings would miss analysts’ expectations.

British gas producer BG Group (BG.L: ) fell 3.2 percent after reporting a 38 percent drop in fourth quarter profit (Read more your timing to make a profit.)s.

World number two truck maker Volvo (VOLVb.ST: ) rose 3.4 percent after it said its main markets would return to growth this year. It skidded to a wider than expected fourth-quarter loss, hit by restructuring costs and writedowns.

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European shares hit 10-week low on euro zone fears