Publications
Partners
London - Euro zone stocks headed on Monday for their biggest fall since 2011, with southern European banks in particular getting pummelled, after Greece shut its banks and imposed capital controls amid deepening crisis.
Some €30bn in market capitalisation was wiped off euro zone banks as investors dumped financial stocks, fearing the ripple effects of a potential Greek exit from the euro zone.
The blue-chip Euro STOXX 50 index sank 3.9%, with benchmark indexes in Portugal and Italy down 4 to 4.5%. European stock-market volatility surged to a fresh six-month high.
The turmoil saw several German companies rethink plans for stock-market listings.
With the Athens stock exchange itself closed as part of weekend measures taken after a breakdown in talks between Greece and its creditors, a lot of the pain was also shouldered by US-listed Greek assets traded during pre-market hours. One Greek bank's US shares slumped some 30%.
Greece itself does not loom large on Europe's corporate radar but there were growing fears on Monday that financial contagion would spread to peripheral euro economies like Portugal and Spain - even as lenders and government officials played down such risks.
"The market is singling out banks with the largest sovereign European (debt) exposure ... There are real genuine concerns about the spread of contagion," said Chris Parkinson, head of research at Christopher Street Capital.
All but one of the 10 worst-performing stocks on the STOXX Europe 600 index were banks, with Banco Comercial Portugues, Italy's Monte dei Paschi di Siena and Austria's Raiffeisen Bank down 6-9%.
The exception was travel operator TUI , down 7%, weighed down not just by Greece but also an Islamist shooting attack in Tunisia on Friday that killed 39 foreign tourists.
For all the selling, however, there were more sanguine investors who said that the European Central Bank would fight to limit the fall-out of prolonged financial market turmoil and who said they were on the look-out for buying opportunities.
"We think that the current crisis - whatever the outcome - will probably not damage the longer-term prospects for European equities," Barclays strategists wrote in a note to clients.
Goldman Sachs wrote in a note that its base case remained that Greece would stay in the euro zone, even as the risks of its departure were rising.
