European stocks fall on Greek default concerns

Eurostoxx 50: 2,730.62 (–0.88) Frankfurt DAX: 7,110.20 (–4.88) Paris CAC: 3,792.31 (–14.54)EUROPEAN STOCKS retreated yesterday, to a three-month low as Greek prime minister George Papandreou said he will reshuffle his cabinet and seek a confidence vote.

The benchmark Stoxx Europe 600 Index fell 0.5 per cent to 266.73 in London, its lowest level since March, as all but two industry groups lost ground.

“The situation is very terrible at the moment because there are so many stories about the debt crisis out there and nobody knows what the solution is,” said Markus Wallner, a senior equity strategist at Commerzbank in Frankfurt.

“The equity market will only turn around when we finally agree on a solution. Economic data showing no sign that the US is in recovery mode are not helping either,” he said.

European Union talks to forge a new bailout to prevent the first euro-area default stalled.

The impasse over the aid formula and speculation that a government shakeup would disrupt the passage of budget cuts and asset sales sent Greek bonds and the euro plunging yesterday.

Rio Tinto, the world’s second-biggest mining company, retreated 0.8 per cent to 4,080p.

Anglo American lost 1.8 per cent to 2,811p, while Xstrata fell 0.9 per cent to 1,248p.

Aluminum, copper, lead, nickel, tin and zinc all fell on the London Metal Exchange.

Lenzing dropped 2.7 per cent to €89.49.

Société Générale lost 1.7 per cent to €38.14. Dexia, a lender to local governments that were rescued by France and Belgium in 2008, fell 3.2 per cent to €2.19, the lowest price in more than two years.

Alpha Bank, Greece’s third biggest lender, dropped 4.3 per cent to €3.12, while National Bank of Greece, the country’s largest lender, declined 4.2 per cent to €4.38.

EFG Eurobank Ergasias lost 3.3 per cent to €2.90.

Alcatel-Lucent, France’s largest telecommunications equip-ment maker, led technology stocks lower, falling 1.5 per cent to €3.63.

Carrefour tumbled 3.5 per cent to €27.75 as UBS downgraded the world’s second-largest retailer to “sell” from “neutral”.

Casino Guichard-Perrachon, a French operator of hypermarkets and supermarkets, fell 3.3 per cent to €66.7. – (Bloomberg)