ABC: European Stocks Slip Amid Greek, Austrian Concerns
European stocks slip amid Greek, Austrian concerns; euro down at 2-1/2 month dollar low
European stock markets fell Tuesday as the euro slid to a two and a half month low against the euro amid ongoing concerns about Greece's debts and worries over the financial health of Austria's banks.
The FTSE 100 index of leading British shares was down 29 points, or 0.6 percent, at 5,286.34 while Germany's DAX fell 12.08 points, or 0.2 percent, to 5,790.18. The CAC-40 in France was 9.93 points, or 0.3 percent, lower at 3,820.51.
Alongside the fall in stocks, the euro continued to languish, falling another 0.7 percent to $1.4551.
Analysts said worries about Greece and Austria, two countries in the euro, continued to dog the currency as well as stocks.
In Greece, new Prime Minister George Papandreou sought to calm frayed nerves Monday about the parlous state of the country's public finances by announcing a package of spending cuts as part of a drive to bring borrowing down from over 12 percent of economic output to under 3 percent by 2013.
"Whether or not a debt crisis can be avoided in Greece remains to be seen, but the whole affair has once more raised questions about the political and structural mechanisms of the eurozone," said Neil Mellor, an analyst at Bank of New York Mellon.
As if Greece's problems weren't enough, investors are also beginning to fret about the exposure of Austria's banks to Eastern Europe, where the recession has been particularly acute.
On Monday, Austria nationalized Hypo Alpe Adria, a unit of German public-sector bank BayernLB — the move was designed to prevent the bank from sliding into a bankruptcy fueled in part by bad loans, much of them in Eastern Europe.
There's also been talk Tuesday that other banks may face a similar fate having notched big losses too. Austria's 'Die Presse' newspaper said the country's three banking supervisory bodies have put OeVAG, the country's fourth largest bank, under surveillance.
"Just as fears about Dubai fade somewhat, the last thing the market needs is to find a fresh source of worry in the European banking system," said Kit Juckes, chief economist at ECU Group.
