Investing.com - European stock markets were sharply lower on Monday, amid concerns over the outcome of talks to restructure Greek sovereign debt while investors eyed a key European summit later in the day.
During European morning trade, the EURO STOXX 50 dropped 1.13%, France’s CAC 40 declined 1.21%, while Germany’s DAX 30 slid 1.02%.
Market sentiment was hit after Greek Finance Minister Evangelos Venizelos rejected on Sunday a German proposal to have a European Union commission review the country’s budget policy.
Earlier Monday, German Finance Minister Wolfgang Schaeuble said in the Wall Street Journal that the euro zone may refuse to grant Greece a fresh bailout unless it convinces Europe that it can fully implement commitments attached to earlier bailout packages.
Meanwhile, European Union leaders were to gather later in the day to finalize discussions on a German-led deficit-control treaty and sign off on a EUR500 billion permanent rescue fund to be set up this year.
Financial stocks were broadly lower as shares in French lenders Societe Generale and BNP Paribas tumbled 3.60% and 3.56%, while Germany’s Deutsche Bank and Commerzbank plunged 2.39% and 2.02% respectively.
Bank of America reduced its recommendation on BNP Paribas shares to “underperform” from “neutral.”
Meanwhile, ABB Ltd. also added to losses, with shares slipping 0.28% after the world’s largest maker of power-distribution equipment agreed to buy Thomas & Betts Corp. for USD3.9 billion to expand its North American distribution network and add low-voltage equipment.
In London, FTSE 100 retreated 0.86%, as U.K. lenders tracked their European counterparts lower.
Shares in the Royal Bank of Scotland tumbled 2.02% and Lloyds Banking declined 1.84%, while Barclays and HSBC Holdings slumped 1.49% and 1.25%.
Elsewhere, mining giants Rio Tinto and Bhp Billiton slid 0.36% and 0.43% respectively, while copper producers Xstrata and Kazakhmys fell 0.32% and 0.17%.
On the upside, Ryanair jumped 2.32% after raising its full-year profit forecast as a plan to ground aircraft and cut capacity during the winter season helped reduce costs and boost fares.
In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to a fall of 0.62%, S&P 500 futures signaled a 0.69% decline, while the Nasdaq 100 futures indicated a 0.73% loss.
Also Tuesday, Italy was to auction as much as EUR8 billion in long term government debt, after the country received a two-notch downgrade from Fitch’s on Friday.