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European stocks extend losses as E.Z. concerns dominate; Dax down 1.16%

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Shutterstock photo - European stocks extended losses on Wednesday, weighed by fears over a potential fallout from a last minute bailout for Cyprus and growing concerns over political deadlock in Italy.

During European morning trade, the EURO STOXX 50 plummeted 1.65%, France's CAC 40 retreated 1.85%, while Germany's DAX 30 tumbled 1.16%.

Investors remained concerned that the bailout deal for Cyprus could set a precedent for future bailouts in larger euro zone states, with big bank depositors and senior bond holders forced to suffer losses.

Meanwhile, worries over a political stalemate in Italy mounted after a leading Italian politician cast doubt on prospects for forming a new government.

Stocks pushed lower following media reports that Pier Luigi Bersani, the head of Italy's center-left alliance, ruled out forming a coalition government, saying that only an "insane person" would want to govern Italy.

Financial stocks pushed lower, as shares in French lenders Societe Generale and BNP Paribas tumbled 2.60% and 3.42%, while Germany's Deutsche Bank and Commerzbank plunged 3.84% and 2.07% respectively.

Peripheral lenders also extended losses, with Italian banks Intesa Sanpaolo and Unicredit plummeting 2.14% and 2.16%, while Spain's BBVA and Banco Santander slid 1.62% and 2.27%.

Elsewhere, Safran plunged 2.72%, as France was preparing to sell about 13 million shares in the maker of aircraft engines.

In London, FTSE 100 retreated 0.76%, after data showed that U.K. gross domestic product contracted by 0.3% in the three months to December, in line with preliminary estimates.

Mining giants BHP Billiton and Rio Tinto remained higher, up 0.05% and 0.82% respectively, while rival Eurasian Natural Resources dipped 0.08%, erasing earlier gains.

Copper producers Xstrata and Kazakhmys held gains, climbing 0.81% and 1.75%.

Meanwhile, oil and gas major Anglo American turned lower, dropping 0.71%, as did Petrofac and BP, down 1.20% and 0.86% respectively.

In the financial sector, stocks were mixed. HSBC Holdings slid 0.38% and the Royal Bank of Scotland tumbled 1.01%, while Barclays added 0.18% and Lloyds Banking surged 2.06%.

In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to a 0.44% drop, S&P 500 futures signaled a 0.44% slump, while the Nasdaq 100 futures indicated a 0.43% decline.

Also Wednesday, data showed that economic confidence across the euro zone declined this month, reversing four months of gains, reinforcing concerns over the economic outlook for the currency bloc.

The European Commission's economic sentiment index slumped by 1.1 points to 90.0, led lower by falling optimism among manufacturers.

Later in the day, the U.S. was to produce industry data in pending home sales and a government report on crude oil stockpiles. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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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.

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