European shares are lower Friday, led by a sell-off in some bank stocks. The weakness follows a report in the FT that the ECB is concerned about the weak Turkish Lira and the potential contagion across Europe from that.
By 1345 BST, the EUROSTOXX 600 was 0.99% lower, while the EUROSTOXX 50 slid 1.67%. Regional bourses were also negative. The German DAX lost 1.85%, the French CAC was down 1.32% and the Spanish IBEX was 1.42% in negative territory.
Turkish fears weigh on bank stocks
European bank stocks are pushing the indices lower Friday after a report in the FT stated the ECB is growing increasingly concerned over Turkey’s financial situation. The country's deficit is 5.5% of GDP, which is quite high and the country must refinance some of its debt this year.
In the meantime, the Turkish lira has lost around 30% of its value against the US dollar, while its stock market is also weaker – 17% down in local currency terms, or some 40% lower in US dollar terms.
All of this is potentially harmful to European banks who hold substantial amounts of Turkish debts and that’s what the ECB is worried about.
Banking stocks that are trading lower Friday include:
- BNP Paribas shares slipped 3.67% to €52.19.
- UniCredit shares fell 4.33% to hit €13.83.
- Deutsche Bank shares declined 4.45% to €10.26.
Other stock movers
Declines aren’t confined to the banking sector.
Ryanair shares slumped 4.02% to €13 as the budget airline announced yet another set of strikes during the peak summer holiday season. The Irish carrier has cancelled 400 flights due to pilot strikes in five countries it operates in.
Meanwhile, Novozymes shares slipped 2.36% to trade at DKK338.80 after the Danish biotech company reported weaker-than-expected Q2 earnings earlier Friday.
And, a profit warning from German chemical firm, K&S AG saw its shares slump 8.71% to €20.66.