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EUFN Dives 4% As Europe Outlook Darkens

The iShares MSCI-Europe Financial Index Fund (NYSEArca:EUFN) dropped 4 percent on Monday, as worries that Europe’s debt problems were spreading to such core countries in the eurozone as France infected stock markets around the world.

The ETF broadly canvases Europe, with four of the top six holdings—France, Germany, Spain and Italy—being eurozone countries. Its top two holdings are the U.K. and Switzerland, at almost 32 percent and 13 percent, respectively. EUFN fell 59 cents, 3.91 percent, to $14.50 a share in trade on Monday. Europe’s markets are now closed, so its move for the day looks to be finished.

World markets are in near-panic mode as concerns about how sovereign debt problems in the so-called PIIGS countries—Portugal, Ireland, Italy, Greece and Spain—ripple through to private banks. French banks, in particular, are said to have large exposure to Greek bonds, and should those credits plunge in value, entire banks in France could be dragged to the edge of insolvency.

Those fears were heightened on Monday amid expectations that Moody’s ratings service was on the verge of downgrading credit of French banks this week because of their exposure to Greece, causing their shares to plunge, according to a report in the Wall Street Journal over the weekend, citing sources familiar with the matter.

France has pledged to support its largest banks, including BNP Paribas SA, Societe Generale SA and Credit Agricole SA. Nonetheless, France's broad stock index, the CAC 40, fell 4.03 percent on Monday.

The iShares ETF, EUFN, has almost 11.65 percent of its portfolio in France, 11.45 in Germany, nearly 10 percent in Spain and 6.1 percent in Italy, according to data compiled by IndexUniverse.

The ETF’s top three holdings are U.K.-based HSBC Holdings Plc, Spain-based Banco Santander SA and France-based BNP Paribas.

EUFN has borne much of the brunt of investor anxiety this year, and has lost more than a third of its value in the past six months.

The ETF came to market in January 2010 as Europe’s sovereign debt crisis first reared its head. It had $4.5 million in assets as of Friday, Sept. 9, according to data compiled by IndexUniverse.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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