Plunge for Greek stocks leads markets lower

European equities slumped, led by a plunge in Greek stocks after an unexpected decision to bring forward its presidential election. The political gamble by the Greek government has heightened uncertainty over the country’s transition out of its bailout.

The FTSEurofirst 300 index of top European shares was down 2.3 per cent by the close, posting its biggest fall since mid-October. On the Athens Stock Exchange, Greek shares sank 12.8 per cent to post their biggest single-session fall since November 1987.

DUBLIN

The Iseq index slid 2.4 per cent on a rough day for stock markets in euro zone peripheral countries. Its two largest stocks, CRH and Ryanair, both declined by more than 2 per cent amid a continent-wide wobble for equities.

Building materials group CRH closed down 2.7 per cent at €19.12, while Ryanair fared little better, finishing at €9.42, down 2.4 per cent, as buyers circled the market.

Paper and packaging group Smurfit Kappa fell 3.25 per cent to €18.18, while insulation-maker Kingspan dropped 1.75 per cent to €14.01. Drinks group C&C continued the declining trend, down 1.7 per cent at €3.56, although food group Kerry contained its loss on the day to just 0.9 per cent, finishing at €58.73.

Bookmaker Paddy Power, which announced three appointments to its management team, fell 2.2 per cent to €64.28.

LONDON

UK stocks fell to a one-month low as Tesco led supermarket stocks lower after it issued a profit warning. The FTSE 100 index of blue-chip shares slipped 2.1 per cent at the close of trading, extending Monday's losses. UK manufacturing output also unexpectedly fell for the first time in five months.

Tesco plunged after another profit warning, down 6.6 per cent to 175 pence after hitting their lowest in nearly 15 years. Tesco slashed its full-year outlook by almost a third in the latest downgrade, triggered by an accounting scandal and intense competition at home.

Elsewhere among grocery sector stocks, J Sainsbury fell 1.8 per cent to 232 pence and Wm Morrison Supermarkets lost 4.4 per cent to 177 pence.

Temporary power generation company Aggreko lost 4.6 per cent to 1,489 pence after analysts at Jefferies Group lowered its recommendation to the equivalent of a sell.

Mining and energy stocks also fell.

EUROPE

Stocks retreated for a second day, with losses across the board, as Germany’s Dax index fell 2.2 per cent and France’s Cac dropped 2.5 per cent.

Spain's Ibex and Italy's FTSE MIB fell down 3.2 per cent and 2.8 per cent respectively as peripheral stock markets sold off, although analysts noted that the political uncertainty was limited to Greece.

Greek banks fell sharply, with National Bank of Greece down 20.5 per cent, Alpha Bank dropping 14.3 per cent and Piraeus Bank losing 16 per cent. Deutsche Bank slipped 3.7 per cent.

The US government accused Germany’s largest lender of using underfunded shell companies to evade taxes in a lawsuit seeking $190 million in taxes, penalties and interest.

US

The Standard and Poor’s 500 Index pared losses midway through the session, with small-cap, technology and energy shares rebounding.

Citigroup fell 1.2 per cent after chief executive Michael Corbat said the company would report $2.7 billion of legal costs in the fourth quarter and $800 million in expenses tied to headcount and real estate.

Bank of America declined 1.1 per cent after the second-biggest US bank said it expected trading revenue to decline this quarter from the previous three months and a year earlier.

Verizon Communications slipped 4.4 per cent after saying discounts and promotions would hurt profitability at its wireless business. – Additional reporting: Bloomberg/Reuters