Investor confidence ebbs as European debt concerns grow
By Richard Hubbard
LONDON (Reuters) - Concerns about Europe's finances in the absence of a Greek debt deal pushed the euro off six-week highs and sent world stocks lower on Monday, with investors nervously awaiting the outcome of a European Union leaders summit.
U.S. stock index futures signaled a weaker start for Wall Street as tension over a German-led pact for stricter budgetary discipline, to be discussed by EU leaders, hit confidence that the region was getting on top of its debt problems.
"Confidence globally gets eroded and that has a negative impact on equity markets and also on corporate investment," James Knightley, senior economist at ING, said.
The pan-European FTSEurofirst 300 .FTEU3 index of top shares was down 0.8 percent at 1,031.96 points after posting its first weekly loss since mid-December on Friday, following lower-than-expected U.S. GDP figures.
Financial stocks, seen as most exposed to Europe's debt problems, led the falls with the Europe STOXX 600 bank index down 2.6 percent.
The euro also saw some profit taking, after its strongest weekly rally in more than three months last week, on the lack of concrete progress in the Greek debt talks, which officials have said is expected later in the week.
Portugal's slide towards becoming the next Greece and needing a second bailout gathered pace meanwhile as banks raised the cost of insuring government bonds against default and insisted the money be paid up front instead of over years.
On Monday it cost a record 3.9 million euros ($5.12 million) to insure 10 million euros of Portuguese debt. Continued...