European Shares Slide as Portugal, Italy Lenders Flop

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European Shares Slide as Portugal, Italy Lenders Flop

European shares declined for a fifth day as a measure of banks retreated to its lowest point this year and stocks in “peripheral” nations plummeted.

Lenders in Portugal, Italy and Spain dropped, pulling an industry index down to the fourth loss in five days. Furgo NV dropped the most since 2003 after announcing lower profit estimates and projecting a write-off of up to 350 million euros ($477 million). Gerresheimer AG and Tryg A/S ascended after registering three-month earnings that topped analysts’ projections.

The Stoxx Europe 600 Index lost 1.1% to 336.37 at the end of trading in London, deepening its five-day plunge to 3.6%, the mst since March. Investors are assessing valuations that nearly touch highest levels since 2009 amid growing fear over signs economic recovery in the euro area remains volatile.

“We’ve seen a lot of money go into the periphery earlier this year, and banks have a fairly big weighting in those regions.As investors revisit their positions, sentiment can turn quite quickly. The potential for banks to beat earnings this quarter is very limited, so investors think it’s prudent to take money away from the table,” Veronika Pechlaner of Ashburton Ltd in Jersey, Channel Islands told Bloomberg.

A measure of banks in the euro area dropped 1.7%, flopping the second most among 19 sectors. Banco Espirito Santo SA declined 17% to 50.9 euro cents before the stock was suspended by the Portuguese securities regulator.

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Banco Commercial Portuguese SA, the second-biggest publicly listed bank in the country, reversed 6% to 10.2 euro cents.

PSI index of Portugal dropped 4.2% to 6,105.24, plunging the most since July last year and hitting the lowest point since October, MarketWatch reported.

France’s CAC 40 gauge declined 1.3% to 4,301.26 after the country’s factory output for May tumbled unexpectedly 2.3%. In Italy, the FTSE MIB gauge went down 1.9% to 20,488.75.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com