Eurozone periphery’s banks under pressure

Spain’s leading index dropped in afternoon trade on Thursday, over growing concerns over the budget deficit and growing debts. The fall followed a slide in Portuguese banking stocks as the country’s bonds slumped on growing concerns over the budget deficit and growing debts, drawing attention to other Eurozone periphery nations.

Spain’s Ibex 35 index lost 5.2 per cent to 10320.4, its lowest level since July 2009

Portugal’s Millennium BCP, the country’s biggest listed bank, extended its heavy losses after a sell-off by foreign funds fearful of a sudden rise in the cost of funding for the nation’s banking sector after Portuguese bond spreads over German Bunds were at their widest level for 10 months. Its shares fell to six month lows, down 5.8 per cent to €0.73. Its shares have slid 8.9 per cent since the start of the week.

Banco Espirito Santo fell 5.1 per cent to €3.80. Earlier the cost of insuring Portuguese government debt against default rose to a record high of €216,000 per €10m of exposure.

Portuguese stocks outside of the banking sector were also affected. Cable provider ZON Multimedia dropped 5.5 per cent to €3.80 while EDP Renovaveis the renewable energy unit of Portuguese utility EDP-Energias de Portugal declined 4.2 per cent to €5.92.

The selling came after the European Commission entered new territory by placing Greece’s economic and budgetary policies under closer surveillance than has been applied to any other eurozone country.

Analysts at BNP Paribas said: “The EC endorsement of the Greek fiscal plan provided little comfort as the market is now turning its attention to the other countries at the periphery of Europe, particularly Portugal and Spain.“

Market rumours that Spain was set for a downgrade, although denied by rating agencies, put the country’s stocks undder pressure.

Spain’s Santander, the eurozone’s biggest bank, weakened 3.8 per cent to €9.83 in spite of its having beaten profits forecasts. The bank diversified into emerging markets such as Brazil to offset the losses from a tough domestic market. BBVA, Spain’s second biggest listed bank lost 3.8 per cent to €10.37.

Meanwhile, Ireland’s Allied Irish Banks fell 5.5 per cent to €1.16 while Bank of Ireland dropped 5 per cent to €1.24.

Greek banks continued to weaken. EFG Eurobank lost 4.1 per cent to €6.13, Piraeus Bank fell 2.9 per cent to €6.02 and National Bank of Greece lost 3.3 per cent to €15.47.
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Source:ft.com

Europe Eager For Jobs Data

LONDON -- Trading volumes in Europe jumped on Friday as investors awaited a key non-farm payrolls number from the United States.

The most optimistic forecasters expect that the U.S. economy added jobs in December after two years of losses. Nonfarm payrolls shed just 11,000 jobs in November. (See "All Eyes On U.S. Jobs Figure.")

Over the last two years the United States has shed 7.2 million jobs, the biggest as a percentage of all jobs since World War II was ending in 1944-45, according to TradeTheNews.com. President Obama was due to comment on the U.S. economy at 2.40 p.m. Eastern Standard Time.

Europe also had its own jobless numbers to grapple with on Friday. New data from the European Union showed that the Euro Zone unemployment rate had risen to 10% in November, the highest rate since the single European currency was introduced in 1999.

Among the member countries that use the euro, Spain had the highest unemployment rate at a whopping 19.4%, while the Netherlands had the lowest at 3.9%. (See "Europe's Best And Worst Countries To Find A Job.")

Latvia has the highest unemployment rate in all of Europe, at 19.7%, followed by Spain. Both countries suffered from massive housing and construction bubbles and a subsequent dearth of jobs for temporary workers.

Source:forbes.com/