Financial stocks lead sudden European equities sell-off

A sudden sell-off in financial stocks took European equities indices sharply lower on Friday as deepening worries about Greece's financial position dented sentiment and left the region's recent highs looking vulnerable.

The Xetra Dax 30 in Frankfurt fell 1.8 per cent to 11,788.44, having been trading only marginally lower throughout most of the morning, taking it over 4 per cent lower since Wednesday. The downturn was led by financial stocks, with Deutsche Bank down 1.1 per cent at €30.63 and Commerzbank down 3.1 per cent at €12.8.

There were bigger declines on the periphery of the eurozone. Spain's Ibex 35 was 2 per cent lower at 11,376.0 and the PSI 20 in Portugal 2.3 per cent to 6,002.91.

Overall, the Europe-wide FTSE Eurofirst 300 lost 1.4 per cent to 1,612.86.

Financial stocks were in the vanguard of the losses on the international index amid growing concern about a Greek default as investors continued to dump its government bonds.

The European Commission announced on Friday that there would be a meeting between Greece and its creditors over the weekend. Alexis Tsipras, the Greek prime minister, is also due to meet eurozone finance ministers on April 24 in Riga to discuss reforms he has put forward as part of his government's attempt to unlock further bailout funds and live up to its anti-austerity mandate.

Reinhard Cluse, economist at UBS, said: "It has been obvious for a long time that there is a glaring gap between the policy concepts of the [anti-austerity] Syriza government and the demands of Greece's international partners

"Now, time is running out, and the gulf between them still seems wide. Something has to give soon."

Spain's Banco de Sabadell was the biggest single faller in the financial sector, down 4.3 per cent at €2.234. Italy's UniCredit was 3.3 per cent weaker at €6.08, while Holland's ING lost 3 per cent to €13.40. Santander of Spain fell 2.8 per cent to €6.57.

Greece was not the only factor souring sentiment.

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"There is wariness over what happens next for Greece but it is not the only worry faced by the market," said Tony Cross, market analyst at Trustnet Direct.

"Traders are skittish over this afternoon's US economic data as anything too hot here will give the Federal Reserve more ammunition for a rate hike and an expiry of options contracts has also spooked some into thinking this could trigger the start of the correction."

Outside the eurozone, the extent of the selling was not as severe. London's FTSE 100 fell 0.6 per cent and Switzerland's SMI lost 0.9 per cent.

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