European Shares Post Biggest Weekly Decline in Three Years

Reuters

European shares fell on Friday, and saw their biggest weekly decline in nearly three years, on worries about weak global growth and further contagion in the euro zone debt crisis, which threatens to engulf Italy and Spain.

A bigger-than-expected rise in U.S. payrolls helped to limit losses.

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The FTSEurofirst 300 index of top European shares fell 1.7 percent to end the day provisionally at 976.10 points, the lowest close in 13 months. Over the week, the index fell 9.8 percent, the biggest weekly fall since October 2008.

Royal Bank of Scotland illustrated the toll the euro zone crisis is taking on the sector. Its shares fell 6.9 percent after it reported a pretax loss of $1.1 billion in the second quarter, bruised by writedowns on Greek government bonds and Irish customers struggling to repay loans.

However, resource stocks were the biggest fallers on the demand outlook following recent weak economic data. The STOXX Europe 600 Oil & Gas Index fell 3.4 percent.

"People are as much worried about the way things are being handled as anything else. The authorities don't seem to have a strategy for Italy and Spain. They're just buying (bonds) in Ireland and Portugal," said Colin McLean, managing director at SVM Asset Management in Edinburgh.