Europe’s financial markets finished sharply lower on Friday on rising fears over the euro zone’s festering debt problems and on concerns US President Barack Obama’s multi billion dollar jobs package will have a hard time getting approved by the US Congress.
The resignation of a top European Central Bank official didn’t help as that signalled a rift within the bank as a time when its role is crucial to resolving the debt crisis.
Banks were hammered because of the huge amounts they have lent to struggling euro zone countries.
Italy’s Unicredit fell over seven percent and France’s Societe Generale 10.6 percent.
The euro slipped to its lowest in six and a half months against the dollar and the Japanese yen.
Nervousness over the outcome of a Greek debt swap deal fuelled safe-haven buying of German and US government bonds.
The swap deal is critical for Athens to secure a second bailout and avert a near-term default that could ripple across the region and the global banking system.