Debt fears hit European markets for seventh day

Eurostoxx 50: 2,286.91 (-88.24) Frankfurt DAX: 5,923.27 (-312.89) Paris CAC: 3,125.19 (-153.37):EUROPEAN STOCKS dropped for a seventh day to their lowest level since August 2009 as Standard and Poor's downgrade of US sovereign debt overshadowed the European Central Bank's purchase of Spanish and Italian government bonds.

Mining companies, carmakers and technology firms paced the sell-off amid concern that the lowering of the US’s credit rating will exacerbate the economic slowdown. Spanish lenders retreated even after the ECB was said to buy the country’s government bonds in a bid to tame the region’s debt crisis.

The benchmark Stoxx Europe 600 Index dropped 4.1 per cent to 228.98 at the 4:30pm close in London, for its biggest retreat since March 2009. The gauge tumbled 9.9 per cent last week and has now fallen 21 per cent from this year’s high on February 17th, entering a so-called bear market, amid concern the global economic recovery is at risk.

National benchmark indexes retreated in all 18 western European markets. France’s CAC 40 Index dropped 4.7 per cent, Germany’s DAX Index declined 5 per cent and the UK’s FTSE 100 Index slid 3.4 per cent.

Spain’s IBEX 35 Index and Italy’s FTSE MIB Index lost 2.4 per cent. Both gauges jumped more than 4 per cent earlier yesterday.

BHP Billiton, the world’s largest mining company, plunged 5.1 per cent to 1,846 pence as commodities extended their biggest weekly drop in three months amid concern that the economic slowdown may erode demand.

Anglo American lost 6.2 per cent to 2,365 pence and Rio Tinto sank 6.5 per cent to 3,387.5 pence. Separately, Rio Tinto and Mitsubishi offered A$1.49 billion ($1.54 billion) for the shares in Coal and Allied Industries they don’t own to take the coal miner private.

Peugeot Citroen, which was yesterday downgraded by Morgan Stanley to “underweight”, led carmakers lower, tumbling 9.1 per cent to €20.38. Daimler sank 7.1 per cent to €39.01 and Volkswagen retreated 6.1 per cent to €108.95.

Among technology companies,Alcatel-Lucent plunged 9.7 per cent to €2.22, Infineon Technologies lost 8.3 per cent to €5.45 and ARM Holdings decreased 8.3 per cent to 464 pence. – (Bloomberg)