European stocks retreat on ECB bank plan
London: Europe`s main stock markets slid on profit-taking and the euro retreated from a two-year high against the dollar on Wednesday, as traders looked nervously on ECB plans to assess banks.
London`s benchmark FTSE 100 index ended the day 0.32 percent lower at 6,674.48 points.
Frankfurt`s DAX 30 fell 0.31 percent to 8,919.86 points and the CAC 40 in Paris sank 0.81 percent to 4,260.66 points.
Wall Street was also on a weak note.
Meanwhile, Germany paid its highest interest rate for two years at a 30-year bond auction on Wednesday, with demand lower as the country`s safe-haven status wanes amid a gradual eurozone recovery.
The average yield for the 30-year Bund was 2.64 percent, against 2.47 in the last such quarterly issue on July 31, according to figures released by the Bundesbank.
Plummeting banking shares weighed heavily in Madrid where the IBEX 35 index slumped 1.84 percent and in Milan where the MIB retreated 2.35 percent.
The European Central Bank (ECB) on Wednesday said it would next month start to "stress-test" and examine the balance sheets of 124 eurozone banks in advance of assuming an unprecedented supervisory role.
The exhaustive year-long review will seek to sniff out risky loans and assets, insufficient capital and other dangers that would make banks more vulnerable to financial shocks.
ECB president Mario Draghi called the project "an important step forward for Europe" with transparency the main objective.
Shares in Europe`s biggest banks were hit hard. In Germany Deutsche Bank sank 2.18 percent and Commerzbank lost 4.08 percent. In London, RBS fell 2.93 percent, while Madrid`s Santander lost 2.39 percent and France`s BNP Paribas sank 2.18 percent.
The announcement came as Spain said it escaped its two-year recession in the third quarter of this year with timid growth as job destruction eased, the country`s central bank said on Wednesday.
After nine quarters of contraction in a row, the Spanish economy -- the fourth-biggest in the eurozone -- grew by 0.1 percent, the Bank of Spain announced.
Ben May, analyst at Capital Economics consultants, said he doubted however "that the (Spanish) economy will generate a strong enough recovery to bring the unemployment rate and public debt down significantly over the next couple of years".In foreign exchange trading on Wednesday, the euro reached USD 1.3793 -- the highest point since November 2011, but it later stood at USD 1.3778, which compared with USD 1.3780 late in New York on Tuesday.
The European single currency meanwhile came sharply off four-year highs against the yen.
The dollar slid to 97.28 yen from 98.12 yen on Tuesday. Sterling fell against the euro and dollar.
On the London Bullion Market, gold was stable at USD 1,331.25.
The dollar had sunk on Tuesday after weaker-than-expected US jobs data raised expectations the Federal Reserve would keep its stimulus programme in place, traders said.
Traders took the data as a cue to buy as the Fed has said it will reel in its USD 85 billion a month bond-buying scheme only when the economy is strong enough.
Wall Street was also in the red at midday, with the Dow Jones Industrial Average off 0.41 percent and the Nasdaq down by 0.73 percent.
In Asia on Wednesday, Tokyo tumbled 1.95 percent to close at 14,426.05 points as exporters were hit by a stronger yen, dealers said.
However, emerging markets were higher on hopes for a continuation of the Fed`s easy money programme, which has been credited with funding an investment splurge in developing economies.
In other share price movement on Wednesday, French telecoms group Orange fell 5.35 percent to 10.08 euros after the company formerly known as France Telecom reported a 5.5-percent fall in sales in the third quarter.
At brokers Global Equities, Xavier de Villepion commented: "The results are not so bad as all that," adding that the shares had fallen mainly because of profit-taking after a recent strong rise.
Shares in automaker PSA Peugeot Citroen rose 3.32 percent despite a sales slip in the third quarter.