Thursday, May 17, 2012

Euro stocks slump, euro hits four-month dollar low

LONDON — Europe's main stock markets tumbled Thursday and the euro hit a new four-month dollar low as worries spiked over the eurozone debt crisis that is plaguing Greece and now circling Spain.

In afternoon deals, London's benchmark FTSE 100 index dropped 0.92 percent to 5,355.57 points and Frankfurt's DAX 30 slid 0.45 percent to 6,355.84 points.

In Paris, the CAC 40 shed 0.92 percent to 3,020.55, while Milan's FTSE Mib tumbled 1.44 percent and Madrid's IBEX 35 slumped 1.39 percent.

In foreign exchange deals, the European single currency nosedived to a new four-month low at $1.2667. It later recovered to $1.2696, still down from $1.2715 late in New York on Wednesday.

"Markets are worried about eurozone bank deposit runs and an escalating banking crisis," VTB Capital economist Neil MacKinnon told AFP.

Shares in Spain's state-rescued lender Bankia plunged Thursday on the back of newspaper reports that clients had withdrawn more than one billion euros in the past week, while Greeks have also reportedly stepped up pulling funds out of their banks.

Spain's daily newspaper El Mundo reported that Bankia managers told the board the bank had lost a "similar amount" of deposits this week as the 1.16 billion euros withdrawn by clients in the first quarter of the year.

Spain's fourth-largest bank had 112 billion euros in deposits from clients at the end of the first quarter. Read More