European shares hit longest losing run since 1998

European shares extended their losing run to eight weeks on Friday, the longest losing streak since 1998, as uncertainties about Greece's debt crisis persisted, and with Italian banks falling heavily. The FTSEurofirst 300 index of top European shares fell 0.1 percent to 1,074.16 points, the lowest close in more than three months. Over the week, the index fell 1.2 percent, down for the eighth straight week, on concern about the euro zone and slowing global growth.
Volume was high, at 123.9 percent of the index's 90-day average. Italian banks UniCredit and Intesa Sanpaolo fell 5.5 and 4.3 percent respectively, as worries circulated about their capital positions and the deepening eurozone crisis. UniCredit hit a two-year low.
Both stocks were suspended for part of the session, due to the sharp movements, but their volumes were still above their respective 30-day averages. The STOXX Europe 600 Banking Index fell 1.6 percent and is down 9.7 percent this year.
"There's been a flight out of banks, even the stronger ones," said Colin McLean, managing director at SVM Asset Management in Edinburgh. Lloyds and Royal Bank of Scotland, the two British banks in which the state has a sizeable stake, fell 4.1 and 3 percent respectively. The euro zone's debt crisis poses the biggest threat to Britain's financial stability and banks must come clean on their full exposure, Britain's new risk watchdog said on Friday.
Greek Prime Minister George Papandreou said on Friday he expected his socialist party to muster the parliamentary majority required to pass a mid-term austerity plan next week. Across Europe, Britain's FTSE 100 ended the day 0.4 percent higher; Germany's DAX and France's CAC40 fell 0.4 and 0.1 percent respectively. The Thomson Reuters Peripheral Eurozone Countries Index fell 1.3 percent.
Miners helped to limit the European benchmark's losses, rising in line with metals prices, which responded positively to the US data. The Stoxx Europe 600 Basic Resources Index rose 1.4 percent, though it is still down 14.4 percent in 2011. Equity valuations on Thomson Reuters Datastream showed the STOXX Europe 600 carrying a one-year forward price-to-earnings of 10.2 against a 10-year average of 13.4.