European stocks slump, euro hits four-month dollar low – Non Woven Shopping Bags

In afternoon deals, London’s benchmark FTSE 100 index dropped 0.92percent to 5,355.57 points and Frankfurt’s DAX 30 slid 0.45 percentto 6,355.84 points. In Paris, the CAC 40 shed 0.92 percent to 3,020.55, while Milan’sFTSE Mib tumbled 1.44 percent and Madrid’s IBEX 35 slumped 1.39percent. In foreign exchange deals, the European single currency nosedivedto a new four-month low at $1.2667. It later recovered to $1.2696,still down from $1.2715 late in New York on Wednesday. “Markets are worried about eurozone bank deposit runs and anescalating banking crisis,” VTB Capital economist Neil MacKinnontold AFP.

Shares in Spain’s state-rescued lender Bankia plunged Thursday onthe back of newspaper reports that clients had withdrawn more thanone billion euros in the past week, while Greeks have alsoreportedly stepped up pulling funds out of their banks. Spain’s daily newspaper El Mundo reported that Bankia managers toldthe board the bank had lost a “similar amount” of deposits thisweek as the 1.16 billion euros withdrawn by clients in the firstquarter of the year. Spain’s fourth-largest bank had 112 billion euros in deposits fromclients at the end of the first quarter. It shares plunged by over a quarter at one point but laterrecovered to show a loss of 13.9 percent at 1.425 euros inafternoon trading. In another gloomy omen, official data confirmed that Spain sankinto recession with a 0.3-percent contraction in the first quarterof 2012, matching the decline of the previous quarter.

Spain raised 2.494 billion euros in a sale of three- and four-yeargovernment bonds on Thursday, but was forced to pay higher rates ina sign of mounting concern over the country’s debt position. Meanwhile, Germany’s benchmark 10-year bond saw its own rate reacha new record low of 1.420 percent as investors fled to financialsafe-havens. “As we have said all along, the biggest risk is Spain,” saidresearch director Kathleen Brooks at trading site Forex.com. Investors remain extremely anxious that the eurozone debt crisis,which resulted in bailouts for Ireland, Greece and Portugal, couldalso sink Italy — and particularly Spain. Cotton Drawstring Pouch

“Confidence in European equities (is) quickly depleting, this timeafter the European Central Bank admitted it had stopped providingliquidity to some Greek banks that were under-capitalised,” saidanalyst Craig Erlam at trading group Alpari. “Add this to the long list of other eurozone problems and investorsare finding it very difficult to justify taking on the additionalrisk associated with the eurozone.” In Greece, where heavy withdrawals of deposits have also beenreported, a caretaker technocrat government took office on Thursdayto organise the debt-plagued nation’s second elections in just sixweeks after an inconclusive May 6 vote jolted the eurozone. The election left Greece in limbo, pushing the financial marketsand euro down sharply, and the new poll on June 17 offers noguarantee of a viable government able to implement an EU-IMFbailout which has divided the country. The ECB bombshell, revealed on Wednesday, has sent marketsspiralling lower once again on renewed fears over Greece. “Although Greek banks can still access funds through the Greekcentral bank’s emergency lending facility, the situation isextremely grave in Greece and risk assets remain at risk from strayheadlines from Athens or Spain,” added Brooks from Forex.com. Non Woven Shopping Bags

The European Union and the International Monetary Fund, which areall that stand between Greece and a disorderly debt default andexit from the eurozone, have meanwhile warned that no new fundswill be released if progress on pledged reforms and tough austeritymeasures falters. Analysts also expect a degree of volatility in low trading volumeson Thursday, with many European investors away for a religiousholiday. However, markets remain open. US stocks opened lower on eurozone jitters, with the Dow JonesIndustrial Average down 0.16 percent to 12,598.32 points in earlytrading. Jewelry Drawstring Pouch

The S&P 500-stock index dipped 0.14 percent to 1,324.82points, while the tech-rich Nasdaq slipped 0.13 percent to2,870.44. “Eurozone concerns remain a drag on sentiment, with Spanish bankingworries exacerbating ongoing Greek eurozone exit uncertainty,”Charles Schwab & Co. analysts said. Asian markets traded mixed on Thursday as the Greek crisiscontinued to cast a shadow, while dealers got some upbeat news indata showing Japan’s economy grew faster than expected. Tokyo rose 0.86 percent, Seoul added 0.26 percent and Shanghaiclimbed 1.39 percent in value.

However, a late sell-off saw Hong Kong give up its day’s gains toend 0.31 percent lower, while Sydney eased 0.19 percent. The region took a breather and bargain hunters moved in after arecent sell-off caused by May 6 polls in Greece and France that sawa sharp voter backlash against austerity measures.

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