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Financial woes hit Europe stocks
LONDON, England (CNN) -- European markets were mostly lower in midday trading on Wednesday after Lloyds TSB raised concerns about growing bad debt cover. London's FTSE 100 fell 1.2 percent to 4,030.1 and Frankfurt's electronically traded Xetra Dax edged up 0.1 percent to 3,285.70 after spending most of the session in negative territory. The CAC 40 blue chip index in Paris dipped 0.25 percent to 3,215.46. The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was down 0.7 percent with the banking, insurance and computer services sub-sectors leading declines. Lloyds (LLOY), Britain's third biggest bank, fell 5.3 percent to 503 pence. The company said trading was satisfactory but investors were unnerved by it setting aside £165 million ($258 million) for bad loans and economic risks in Argentina. (Full story) Rival Barclays (BARC) lost 2.8 percent to 421 pence, extending the previous session's 6 percent decline after it warned on Tuesday that profits would decline this year. HBOS (HBOS), Britain's biggest mortgage lender, slid 2.3 percent, Abbey National (ANL) slid 3.4 percent to 597 pence and the Royal Bank of Scotland (RBS) dipped 3 percent to 1,504 pence. "Markets are even more worried about a possible crash in the UK housing market boosting bad debts at domestic banks, following the statements from Lloyds TSB and Barclays about rising provisions generally," James Eden, a UK banking analyst at Commerzbank Securities, told Reuters. "However, this fear is misplaced as the cost of borrowing for house buyers is so low and banks look cheap at the moment compared to the UK market," he added. Germany's Commerzbank (CBK) lost 2.6 percent to 9.35 euros and much-speculated merger partner HVB Group (FHVB) slid 1.2 percent to 16.83 euros in Frankfurt. BNP Paribas (PBNP), France's biggest bank, fell 1.3 percent to 38.98 euros. Insurance stocks, led by Royal & Sun Alliance (RSA) and Munch Re (FMUV2), also declined on continued concerns about the financial strength and ability to weather falling stock markets. Outside the banking sector, France Telecom (PFTE) fell 1.9 percent to 16.57 euros ahead of a key board meeting later on Wednesday as the chief executive announces details of a long-awaited financial restructuring plan. (Full story) German electronic component maker Epcos (FEPC), chipmaker Infineon Technologies (FIFX) and software maker SAP (FSIE) slid more than 3 percent each after the tech-laden Nasdaq slid more than 2 percent. Vivendi Universal (PEX), Europe's biggest media company, soared 7.2 percent to 16.73 euros after the media group soothed concerns over its move to take control of Cegetel and a ratings agency welcomed the deal. (Full story) The AEX index in Amsterdam fell 0.6 percent as Philips Electronics, Europe's biggest consumer electronics company, slid 1.9 percent to 20.52 euros and chip equipment maker ASML lost 6 percent to 10.38 euros. Milan's MIB30 index was little changed and the SMI in Zurich slipped 0.1 percent. In the U.S. on Tuesday, investors fell prey to uncertainty about economic stability once again as the major indices closed lower, weighed down by a profit warning from online service provider AOL and a decision by federal regulators to fine some financial firms. The Dow Jones industrial average fell about 1.4 percent, or 119.64 points, to 8742.93 and the Nasdaq composite dropped 2.4 percent, or 35.82 points, to 1448.96, while the Standard & Poor's 500 index slipped 1.5 percent, or 13.78 points, to 920.75. Wall Street was expected to open sharply lower later on Wednesday. S&P 500 index futures fell 9.2 points to 914.2 on the Globex trading system, while fair value, a measure that takes account of interest costs and dividend payments, was calculated at 912.01.
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