European stocks plunged the most in three months on Monday as concern grew that Greece will default and more Spanish regions will follow Valencia in seeking a bailout.
BNP Paribas SA and HSBC Holdings Plc contributed the most to a selloff by a gauge of bank shares. BHP Billiton Ltd., the world’s largest mining company, retreated 2.8 percent as a policy maker in China warned of slowing growth. Groupe Eurotunnel SA slumped 5.4 percent after earnings missed analysts’ estimates. Royal Philips Electronics NV, the biggest lighting company, advanced 4.8 percent as profit increased.
The Stoxx Europe 600 Index tumbled 2.5 percent to 251.8 at 4:35 p.m. in London, the biggest retreat since April 10. The benchmark measure had climbed for the last seven weeks, its longest winning streak in more than six years, as central banks from Europe to China eased monetary policy to help support economic growth.
“The market has had a reality check, making it impossible to justify higher stock prices on so-so company reporting,” said Henrik Drusebjerg, who helps oversee $230 billion as senior strategist at Nordea Bank AB in Copenhagen. “Concern over Greece and the situation in Spain, with Valencia signing up for a bailout, are part of the reality check -- but investors are also catching up with a string of bad data from the U.S. last week and generally disappointing macro news from Europe."
National benchmark indexes fell in all of the 18 western European markets. Germany’s DAX sank 2.7 percent and the U.K.’s FTSE 100 lost 2 percent. Spain’s IBEX 35 dropped 0.4 percent and Italy’s FTSE MIB slid 2.2 percent, paring earlier declines of more than 5 percent after the nations’ market regulators introduced short-selling bans. Greece’s ASE sank 7.1 percent, its biggest drop since 2008.
The troika of Greece’s international creditors -- the European Commission, the European Central Bank and the International Monetary Fund -- will arrive in Athens Tuesday amid doubts that the country will meet its bailout commitments. Germany’s Vice Chancellor, Philipp Roesler, said he’s “very skeptical” that the euro area’s leaders will rescue Greece.
The IMF will stop paying further rescue aid to Greece, making the country’s insolvency in September more likely, Der Spiegel magazine reported, citing unidentified European Union officials.
Spain’s 10-year bond yield climbed 23 basis points to 7.50 percent Monday, the highest since the euro began in 1999, after El Pais reported that six Spanish regions may ask for aid from the central government.
“A cacophony of bad news from Europe was released on Friday and over the weekend as a stark reminder that the euro zone still needs palliative care,” said Jonathan Sudaria, a trader at Capital Spreads in London.
BNP Paribas, France’s biggest lender, sank 5.2 percent to 27.04 euros and HSBC, Europe’s largest lender, retreated 3.3 percent to 515.5 pence. National Bank of Greece SA, the country’s largest lender, tumbled 11 percent to 1.10 euros.
Spanish and Italian lenders reversed their losses after regulators imposed bans on short selling. Banco Santander SA, Spain’s biggest bank, rose 1 percent to 4.23 euros. Bankia SA advanced 7.3 percent to 66.3 euro cents after earlier dropping as much as 9.6 percent. UniCredit SpA gained 1.2 percent to 2.47, after tumbling as much as 7.5 percent.
Italy’s market regulator, Consob, introduced a week-long ban on short selling shares of some banking and insurance companies because of the “recent performance of stock markets.” Spain banned short-selling of all shares for three months.
A gauge of commodity producers in the Stoxx 600 lost 3.5 percent as metal prices fell in London. BHP Billiton sank 2.8 percent to 1,766.5 pence. Petropavlovsk Plc, a producer of gold in Russia, retreated 3.6 percent to 386 pence. Lonmin Plc, the third-biggest platinum producer, slumped 5 percent 672.5 pence.
China’s economic expansion may cool for a seventh straight quarter to 7.4 percent in the three months to September, said Song Guoqing, a member of the monetary-policy committee of the People’s Bank of China.
A July 27 report may show the U.S. economy grew at the slowest pace in a year in the second quarter. Gross domestic product rose at a 1.4 percent annual rate after a 1.9 percent gain in the previous quarter, according to the median forecast of 70 economists surveyed by Bloomberg. Factory orders softened and new-house sales were little changed, other releases may show this week.
Eurotunnel plunged 5.4 percent to 5.94 euros. The company that operates the rail tunnels beneath the English Channel reported first-half earnings before interest, taxes, depreciation and amortization of 205 million euros. That missed the average analyst estimate of 224 million euros in a Bloomberg survey.
Wereldhave NV plummeted 15 percent to 44.53 euros, the largest drop since at least 1989. The Dutch real estate company abandoned its dividend targets for this year and next as Chief Executive Officer Hans Pars quit.
Philips climbed 4.8 percent to 17 euros. The company reported an increase in second-quarter profit as Chief Executive Officer Frans van Houten extended a savings program into a second year. Ebita rose to 504 million euros compared with 395 million euros a year earlier, the company said. Sales of 5.89 billion euros beat the 5.58 billion-euro average analyst prediction in a Bloomberg survey.
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