Investing.com - European stock markets were sharply lower on Wednesday, as investors eyed an Italian government bond auction while ongoing concerns over soaring Spanish borrowing costs and the country’s troubled banking sector weighed on sentiment.
During European morning trade, the EURO STOXX 50 plunged 1.01%, France’s CAC 40 tumbled 1.12%, while Germany’s DAX 30 dropped 0.96%.
Market sentiment weakened as the yield on Spanish 10-year bonds climbed to their highest level so far this year on Tuesday, approaching the critical 7% threshold, after a Spanish official said the government is preparing to recapitalize Bankia, one of the country’s largest commercial lenders.
European Central Bank officials had earlier signaled they would oppose any attempt to fund Bankia’s EUR19 billion recapitalization via the central bank's lending facilities.
Meanwhile, Bank of Spain Governor Miguel Angel Fernandez Ordonez resigned a month early, handing to his successor the task of convincing investors that Spanish banks will not need an international bailout.
Bankia saw shares decline for the sixth consecutive session, diving 14.46%, as financial stocks led losses on European markets.
France’s BNP Paribas was also among the session’s top losers, with shares plummeting 5.08%, while Germany’s two biggest lenders, Deutsche Bank and Commerzbank, retreated 0.99% and 1.33% respectively.
Meanwhile, French steel company Vallourec plunged 2.02%, as the company continues to struggle with declining orders from Europe and Asia, according to Chairman Philippe Crouzet.
Shares in Voestalpine, Austria’s biggest steelmaker, also lost 1.15% after the company said its fiscal full-year net income after payment of hybrid bondholders fell to EUR333.5 million. Voestalpine also said it sees “a challenging environment” in the steel segment.
In London, commodity-heavy FTSE 100 plummeted 1.10%, weighed by losses in mining stocks.
Shares in Rio Tinto tumbled 2.28% and Bhp Billiton plummeted 1.54%, while Anglo American declined 1.23%.
Copper producers Xstrata and Kazakhmys also added to losses, tracking a sharp decline in copper prices, as shares retreated 2.13% and 2.11%.
Elsewhere, U.K. lenders were mixed. Shares in Barclays rose 0.66%, while Lloyds Banking, the Royal Bank of Scotland and HSBC Holdings plunged 0.85%, 1.19% and 1.55% respectively.
Tuesday evening, Barclays said it was slashing interest rates on two-year mortgages to 3.74% from 3.89%, in a move designed to attract borrowers from other banks.
In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to fall of 0.43%, S&P 500 futures signaled a 0.58% decline, while the Nasdaq 100 futures indicated a 0.57% loss.
Later in the day, Italy was to auction up to EUR6.25 billion of five and 10-year bonds, while European Central Bank President Mario Draghi was to speak. In addition, the U.S. was to release a report on pending home sales.
During European morning trade, the EURO STOXX 50 plunged 1.01%, France’s CAC 40 tumbled 1.12%, while Germany’s DAX 30 dropped 0.96%.
Market sentiment weakened as the yield on Spanish 10-year bonds climbed to their highest level so far this year on Tuesday, approaching the critical 7% threshold, after a Spanish official said the government is preparing to recapitalize Bankia, one of the country’s largest commercial lenders.
European Central Bank officials had earlier signaled they would oppose any attempt to fund Bankia’s EUR19 billion recapitalization via the central bank's lending facilities.
Meanwhile, Bank of Spain Governor Miguel Angel Fernandez Ordonez resigned a month early, handing to his successor the task of convincing investors that Spanish banks will not need an international bailout.
Bankia saw shares decline for the sixth consecutive session, diving 14.46%, as financial stocks led losses on European markets.
France’s BNP Paribas was also among the session’s top losers, with shares plummeting 5.08%, while Germany’s two biggest lenders, Deutsche Bank and Commerzbank, retreated 0.99% and 1.33% respectively.
Meanwhile, French steel company Vallourec plunged 2.02%, as the company continues to struggle with declining orders from Europe and Asia, according to Chairman Philippe Crouzet.
Shares in Voestalpine, Austria’s biggest steelmaker, also lost 1.15% after the company said its fiscal full-year net income after payment of hybrid bondholders fell to EUR333.5 million. Voestalpine also said it sees “a challenging environment” in the steel segment.
In London, commodity-heavy FTSE 100 plummeted 1.10%, weighed by losses in mining stocks.
Shares in Rio Tinto tumbled 2.28% and Bhp Billiton plummeted 1.54%, while Anglo American declined 1.23%.
Copper producers Xstrata and Kazakhmys also added to losses, tracking a sharp decline in copper prices, as shares retreated 2.13% and 2.11%.
Elsewhere, U.K. lenders were mixed. Shares in Barclays rose 0.66%, while Lloyds Banking, the Royal Bank of Scotland and HSBC Holdings plunged 0.85%, 1.19% and 1.55% respectively.
Tuesday evening, Barclays said it was slashing interest rates on two-year mortgages to 3.74% from 3.89%, in a move designed to attract borrowers from other banks.
In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to fall of 0.43%, S&P 500 futures signaled a 0.58% decline, while the Nasdaq 100 futures indicated a 0.57% loss.
Later in the day, Italy was to auction up to EUR6.25 billion of five and 10-year bonds, while European Central Bank President Mario Draghi was to speak. In addition, the U.S. was to release a report on pending home sales.