London: European shares edged lower on Monday on concerns that a massive bailout package for Greece may face political obstacles and on doubts that Athens can implement tough austerity measures agreed in exchange for aid. Greek bank shares lost 1.6% in choppy trade despite the European Central Bank announcing its acceptance of all Greek government bonds as security for loans, even if their credit rating continues to fall.
European banks were also weaker, with BNP Paribas, Banco Santander, Deutsche Bank, BBVA, UBS and Natixis down 0.4 to 1.8%.
By 1018 GMT, the FTSEurofirst 300 index of leading European shares was down 0.4% at 1,058.28, after losing 2.7% last week — its third straight week of declines. It fell 1.5% through April, but is up 1.2% this year.
“The catastrophe of default that everybody is worried about is behind us, but the market realises that it will be a very long, difficult road to travel before it can get better,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markes in Bruseels.
Gijsels said the market was concerned whether Athens can carry out the tough steps agreed with its European partners, and other euro zone peripheral countries could come under pressure.
European countries agreed to a €110 billion ($146.5 billion) aid package to Greece at the weekend, and in exchange Athens has promised to carry out spending cuts and tax hikes worth €30 billion over three years, on top of belt-tightening measures already taken.
The emerging aid, the most ever for a country, alleviated some fears of a near-term sovereign debt default, but the package still has to obtain parliamentary approvals and left open the question of which fiscally vulnerable country in Europe might be next. However, strong quarterly company earnings have helped support the equities market. According to Thomson Reuters Proprietary Research, nearly three-quarters of European firms that have reported first quarter results beat market estimates.
BP down in Frankfurt
BP shares in Frankfurt sagged 3.1% after the huge oil slick caused by an underwater leak continued to creep toward the US Gulf Coast, with the Obama government pressing the energy major to stem the oil gushing from its ruptured offshore well.
“The problem with BP is, as long as the leak continues, nobody knows how much it’ll cost to clean up the mess, so the stock could continue to sink for a while,” a Paris-based trader said.
Within the sector, Royal Dutch Shell eased 0.4% and Total was down 1%.
Across Europe, Germany’s DAX slipped 0.2%, France’s CAC 40 lost 0.7% and Spain’s IBEX 35 eased 1%. UK markets were closed for a holiday.
US stock index futures put on 0.2 to 0.3%, indicating a firmer start on Wall Street.
US shares tumbled on Friday to close out the worst week since January as news of a criminal probe into Goldman Sachs unnerved investors already anxious about the prospects for heavy regulation from Washington.