European shares slide on Greek drama, London bank reform

LONDON: European stock markets fell on Wednesday, hit by Greece's ongoing debt crisis, while London's financial sector fell as the British government appeared set to back plans to overhaul banks.

The British capital's benchmark FTSE 100 index of top shares slid 0.13 percent to 5,795.60 points in midday trade.

Frankfurt's DAX 30 shed 0.44 percent to 7,173.44 points and in Paris the CAC 40 index lost 0.42 percent to 3,848.23.

The Stoxx 50 index of leading eurozone companies recoiled 0.69 percent to 2,761.25 points.

"Once again it is Greece that is causing the majority of the issues -- every day seems to bring up more obstacles to a further Greek bailout," said equities analyst James Hughes at financial trading firm Alpari UK.

"I think it is more the uncertainty surrounding it rather than anything else that is causing the stock market moves. While finance ministers remain in deadlock over the what steps to take next the market will continue to worry that Greece will default."

Eurozone finance ministers failed to reach accord at talks on Tuesday on a second bailout package to avert a Greek default.

Meanwhile, thousands of Greek protesters surrounded the parliament building on Wednesday as a general strike paralysed the country and the prime minister held emergency talks on a controversial reform package.

Across in London, British finance minister George Osborne was Wednesday set to endorse a call for banks to ring-fence retail operations from their investment arms to avoid another financial crisis, a treasury source said.

In midday deals, Barclays bank shares sank 1.02 percent to 261.85 pence, HSBC lost 0.89 percent to 610.50 pence and Standard Chartered dipped 0.25 percent to 1,570 pence, while Lloyds Banking Group added a marginal 0.07 percent to stand at 48.58 pence.

Chancellor of the Exchequer Osborne, part of the Conservative party heading a coalition government with the Liberal Democrats, will make the announcement in a high-profile annual address to business leaders in central London.

Osborne will approve the findings of the Independent Commission on Banking (ICB), which earlier this year called for a "ring-fencing" of retail businesses that would not allow investment-division losses to sink banks.

The London stock market was also pulled lower by a mixed picture of British unemployment.

Britain's jobless total fell by the biggest amount in more than ten years in the three months to April, official data showed on Wednesday.

The Office for National Statistics (ONS) said in a statement that the number of unemployed in Britain fell by 88,000 to 2.43 million people. That was the largest decline since the three months to August 2000.

However, the ONS added that the number of people claiming benefits rose by 19,600 between April and May to 1.49 million -- which was the biggest increase since July 2009.

Wall Street had jumped more than one percent on Tuesday, giving investors some relief after a six-week losing streak culminated in a brutal sell-off last week.

Asian stock markets were mostly lower on Wednesday despite gains on Wall Street and positive US data, but Tokyo remained buoyant thanks to bullishness on Tokyo Electric Power, traders said.

Copyright AFP (Agence France-Presse), 2011