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European shares tumble on global economic gloom

Shares take a further dip on Friday as the resignation of European central bank representative further hurts trader sentiment

Reuters, Friday 9 Sep 2011
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European shares ended sharply lower on Friday on concerns U.S. President Barack Obama's US$447 billion jobs package might face hurdles in Congress and as the resignation of a top European Central Bank official signalled a rift within the central bank.

The move by ECB Executive Board Member Juergen Stark to quit in disagreement with the bank's policy of buying euro zone government bonds to combat the currency bloc's debt crisis further hurt sentiment at a time when the role of the central bank was crucial to resolve the euro zone debt crisis.

The FTSEurofirst 300 of top European shares provisionally closed 2.5 per cent lower at 916.10 points, while the Thomson Reuters Peripheral Eurozone Index fell 5.9 per cent.

"It's hard to get excited about equities when they face such considerable headwinds. The banking sector remains a dog of the stock market with investors shunning every moment they start to look like they've turned a corner," said Angus Campbell, head of sales at Capital Spreads.

Banks, which have significant exposure to the euro zone countries and generally suffer during difficult economic environment, were the hardest hit on concerns the policymakers were not doing enough to prevent major economies moving back into recession. The European banking index fell 4.9 per cent, while Societe Generale fell 10.6 per cent. 

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