LONDON (ShareCast) - - Markets lose all 2012 gains
- Spain completes bond auction but rates climb dramatically
- ECB suspends lending to Greek banks

FTSE-100: -1.24%
Dax-30: -1.18%
Stoxx 600: -1.02%
Cac-40: -1.2%
Ibex 35: -1.11%
FTSE MIB: -1.46%

European stock markets ended the day where they were before January as uncertainty over Greece obliterated 2012’s early enthusiasm.

The benchmark Stoxx Europe 600 reached 241 at the close, it began the year at 244 and reached 272.86 at it height in mid-March. Since then it has been in a steady decline, pushed down by continuing concerns over Greece.

The debt-strapped country faces new elections in June following an inconclusive poll at the beginning of May. Markets are concerned at the rising popularity of left-wing parties which reject the terms of the current bailouts from the IMF and Eurozone.

Greece could very well elect to renege on its commitments under the rescue packages, at which point it might have to leave the euro.

Spain has suffered the most from concerns over “what happens after Greece”. Its inability to achieve EU wide budget targets has alarmed investors. Yesterday the Prime Minister, Mariano Rajoy, said his country faced being shut out of debt markets on fears over its acute budget deficit. Today it managed to sell nearly €2.5bn in debt, including some of a near three-year maturity. The average yield was 4.876% versus 4.037% at a similar auction two weeks ago.

Meanwhile, the third largest Spanish bank, Bankia has seen its share price collapse 11% after reports nearly €1bn in withdrawals have been made since the Spanish government was forced to prop up the lender last week. These reports have been since denied.

The ECB says it has halted lending to Greek banks until they comply with recapitalisation requirements.

COMPANIES

Financial services (-2.6%) and banks (-2.3%) were the weakest sectors on the Stoxx 600.

The German stock exchange company Deutsche Boerse fell 11.6%, French financial giant BNP Paribas closed down 4.1%.

In Italy and Spain Banca Popolare di Milano (-5.3%) and Bankinter (-4.8%) were amongst the biggest fallers.

OTHER MARKETS

The euro fell 0.08% against the dollar to sit at $1.2706 by 16:50 London time.

The cost of a futures contract (June) on a barrel of Brent crude dropped 1.26% to $108.37 at 16:40 in London.

BS

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