European stocks lower on debt fears; DAX down 1%

Investing.com - European stock markets extended losses on Wednesday, as Italian borrowing costs remained close to unsustainable levels following a government bond auction.

During European morning trade, the EURO STOXX 50 tumbled 1.08%, France’s CAC 40 plunged 1.41%, while Germany’s DAX 30 plummeted 1%.

Italy’s Treasury sold the full targeted amount of EUR3 billion of five-year government bonds, at an average yield of 6.47%, a euro era high, after paying 6.29% at a similar auction in November.

Following the auction, the yield on Italian 10-year bonds was above the critical 7% threshold, re-approaching the euro-era highs hit last month.

Financial stocks turned sharply lower as shares in Societe Generale plunged 4.35% and BNP Paribas plummeted 3.50%, while Credit Agricole saw shares decline 2.14%, as the bank was expected to announce 2,350 job cuts later in the day.  

Meanwhile, German lender Deutsche Bank fell 0.29%. Germany auctioned EUR4.18 billion of two-year bonds at euro-era low yields earlier Wednesday, reassuring investors after an auction of 10-year bonds last month met with extremely weak investor demand.

Elsewhere, shares in Tele2 sank 4.86% as Sweden’s second-biggest phone company lowered its forecast for subscribers in Russia to 20.6 million by the end of this year. The company had predicted it would get 21 million customers in the country.

In London, FTSE 100 plunged 0.94% as U.K. lenders tracked their European counterparts sharply lower.

Shares in Lloyds Banking plummeted 3.42% and the Royal Bank of Scotland tumbled 3.04%, while Barclays and HSBC Holdings retreated 3.12% and 1.44% respectively.

Meanwhile, mining giants Rio Tinto and Bhp Billiton tumbled 2.51% and 2%, while Anglo American plunged 1.61%.

Copper producers also added to losses with shares in Xstrata and Kazakhmys declining 0.54% and 2.12%.

Elsewhere, IT company Logica plummeted 16.75%, after reducing its revenue-growth forecast and accelerating a restructuring that will lead to charges of GBP80 million this year and 1,300 job losses.

In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to a fall of 0.18%, S&P 500 futures signaled a 0.09% decline, while the Nasdaq 100 futures indicated a 0.41% drop.

Earlier Wednesday, official data showed that industrial production in the euro zone declined unexpectedly in October, falling for the second consecutive month.