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European Shares Slump on ECB Stress Test Rules, Fears of Tighter Policy in China
By: MT Newswires
European stocks fell, led by banks after the ECB set out plans for a new, tougher stress test. Pressure also stemmed from fears of tighter policy in China, amplified by reports that some of its big banks were tripling write-offs on bad loans.
The benchmark seven-day repo contract, which had been steadily sliding since October 9, spiked in the morning session, a day after a policy adviser to the People's Bank of China (PBOC) told Reuters it was weighing tightening measures.
The Nikkei also declined on a stronger yen and Australia on fading hopes for a rate cut after higher-than-expected inflation data.
Around the region, the ECB said it will require lenders to have a capital ratio of 8% and changed the rules for what qualifies as capital.
In ADR news, STMicroelectronics ( STM ) dropped after reporting a $142 million quarterly net loss. It took a $120 million impairment charge in Q3 and delayed a profitability target after splitting up its venture with Ericsson AB.
GlaxoSmithKline ( GSK ) fell after Q3 China sales fell 61%. The Chinese authorities have started an investigation into corruption by the company.
The FTSE-100 was last down 0.32% at 6,674.48, the DAX down 0.31% at 8,919.86 and the CAC-40 down 0.81% at 4,260.66.