European Markets Slump to 3-Month Low

Reuters

European shares fell to a three-month low on Monday and braced for a bumpy ride ahead as worsening global economic conditions and political uncertainty in France and the Netherlands threatened to deepen the euro zone's crisis.

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The plunge came as data showed the euro zone's private sector unexpectedly slumped in April, denting the demand outlook for European corporates, dampening hopes that the area would emerge from recession soon and potentially hampering governments' efforts to balance their budgets.

"Eurozone economic momentum is weakening and is going to be more difficult for governments to reach fiscal targets in a weak growth environment," Emmanuel Cau, a strategist at JPMorgan said.

The pan-European FTSEurofirst 300 index provisionally closed 2.4 percent lower at 1,021.08 points, with euro zone banks , which own the bulk of the region's debt, down nearly 4 percent to levels last seen in late November, before the European Central Bank's first offering of ultra-cheap three-year loans.

Also fuelling fiscal concerns was a government crisis in the Netherlands, a close ally of Germany in the austerity push, and the results of first-round presidential elections in France, where Socialist candidate Francois Hollande, who promised to renegotiate a European budget compact, beat incumbent Nicolas Sarkozy.

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