By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets were firmly lower
in midmorning trade on Wednesday, following a major setback in
weeklong attempts to form a government in Italy.
The Stoxx Europe 600 index dropped 0.6% to 292.03, after opening
in positive territory.
The turnaround was sparked by comments from Italy's Democratic
Party leader Pier Luigi Bersani, he wouldn't attempt to put
together a government, after struggling to form a coalition since
inconclusive parliamentary elections in late February. Bersani was
quoted as saying that only an "insane" person would want to govern
the country in the current environment and that Italy is in a
"mess."
The FTSE MIB index gave up 1.5% to 15,263.76, with banks posting
some of the biggest losses. Intesa Sanpaolo SpA lost 2.5%, while
UniCredit SpA shaved off 3.5%.
Most banking shares in Europe were mired in the red, also
following days of uncertainty over the Cyprus banking system. The
island nation earlier in the week agreed to a bailout package
including a levy on bank deposits above 100,000 euros ($128,440),
fueling fears that the measures could set precedent for solving
future banking crisis in other euro-zone countries.
Cypriot authorities were planning to reopen the country's banks
on Thursday, but customers could find their access to money limited
with authorities expected to detail capital controls later on
Wednesday. The Cyprus Stock Exchange was also closed for trading
until Thursday. Read: Three ways for Europe to regain control of
its crisis--Nomura
In Spain, shares of Banco Santander SA (SAN) dropped 3% and BBVA
SA (BBVA) fell 2.6%. The IBEX 35 index traded 1.9% lower at
7,836.60.
France's BNP Paribas SA slumped off 3.7%, Crédit Agricole SA
dropped 2.8% and Société Générale SA shaved off 2.7%.
Also in Paris, shares of European Aeronautic Defence & Space
Co. (EADSY) shed 2.8%, after French media group Lagardere SCA Chief
Executive Arnaud Lagardère said in a report in the French daily Les
Echos that the firm will sell its 7.5% stake in the Airbus owner.
Lagardère fell 2%.
The CAC 40 index declined 1.3% to 3,698.96.
Germany's DAX 30 index fell 0.9% to 7,810.43. Shares of Allianz
SE gave up 2.4%, as the insurer said it would buy 94% of Yapi Kredi
Sigorta, an insurance unit of Yapi Kredi, Turkey's fourth largest
private bank by assets.
In the U.K., the FTSE 100 index moved 0.6% lower to 6,362.18,
with oil firms tracking oil prices lower. Shares of BP PLC (BP)
lost 0.9% and Royal Dutch Shell PLC (RDSB) dropped 0.8%.
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