By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Europe's benchmark stock index closed at
the lowest level since early May on Thursday, with banking turmoil
in Portugal sending the financial sector across Europe sliding, and
as disappointing French and Italian industrial-production
highlighted concerns about euro-zone growth.
The Stoxx Europe 600 index slid 1.1% to close at 336.37, marking
a fifth straight day in the red.
Leading losers in the pan-European index, shares of Fugro NV
tanked 19.5% after the oil-services company issued a profit warning
for the first half of the year.
Trading in Espirito Santo Financial Group SA (ESFG) and Banco
Espirito Santo AS was suspended on Thursday, when their losses
amounted to 9% and 17%, respectively.
ESFG sank 11% on Wednesday and BES lost 4.7%, when news that
parent company Espirito Santo International had delayed coupon
payments on some short-term debt sent shivers through Portugal's
financial sector. ESI owns 49% of ESFG, which owns 25% of BES.
Read: Portugal's banking turmoil revives darkest nightmares about
Europe.
Portugal's PSI index slumped 4.2% to 6,105.24, it's biggest drop
since July last year and the lowest closing level since
October.
The yield on 10-year Portuguese government bonds climbed 21
points to 3.97%, according to electronic trading platform
Tradeweb.
"The event has hit European financials like a torpedo and has
revived investors' darkest nightmares about Europe," said Peter
Garnry, head of equity strategy at Saxo Bank, in a note.
Shares of Banco Popolare SC shaved off 2.9% in Milan, Banca
Monte dei Paschi di Siena SpA dropped 4.3%, Banco de Sabadell SA
closed 2.4% lower in Madrid, and Commerzbank AG lost 2% in
Frankfurt.
The euro (EURUSD) was also weak, sliding to $1.361, from $1.364
on Wednesday.
France, Italy data disappoint
Elsewhere, France's CAC 40 index lost 1.3% to 4,301.26, after
May industrial production data for the country dropped
unexpectedly, with manufacturing output sinking 2.3%.
Industrial-output data out of Italy were also disappointing,
showing production declined 1.2% in May on the month, marking the
biggest slide since November 2012. The FTSE MIB index slumped 1.9%
to 20,488.75.
The data reports come after German data earlier this week came
in on the weak side, stirring concerns of a growth slowdown in
Europe.
Germany's Economy Ministry said in its monthly report on
Thursday that the weakness in the spring, coupled with geopolitical
unrest, is hurting growth now, but that sentiment indicators
suggest the upward trend from earlier in the year will stay intact,
Reuters reported.
Germany's DAX 30 index is down 3.5% on the week so far and
closed 1.5% lower at 9,659.13 on Thursday.
Among movers, BNP Paribas SA gave up 1.4% after the French bank
late Wednesday pleaded guilty in U.S. federal court to a criminal
charge over its dealings with sanctioned countries.
BOE rate call
The U.K.'s FTSE 100 index fell 0.7% to 6,672.37, with little
reaction to the Bank of England's rate decision. The U.K. central
bank left its key lending rate at a record low of 0.5%, where it
has stood since March 2009, and maintained its asset purchases, the
centerpiece of its quantitative-easing strategy, at 375 billion
pounds ($642 billion). The no-change call was widely expected.
The pound (GBPUSD) traded at $1.7125 at the time of the European
close, compared with $1.715 late Wednesday.
Miners were among decliners after Chinese trade data for June
surprised to the downside. BHP Billiton PLC (BHP) and Rio Tinto PLC
(RIO) each gave up 1.4%.
On a more upbeat note in London, Burberry Group PLC (BURBY)
advanced 3.2% after the luxury-goods retailer reported a 12%
increase in same-store sales in the first quarter.
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