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European stocks retreated, snapping two days of gains, as Greece moved closer to a possible exit from the euro currency union and German Chancellor Angela Merkel’s party lost a state election.
Greece’s President, Karolos Papoulias, failed to secure agreement on a unity government and avert new elections. Syriza, the left-wing group opposed to spending cuts, defied overtures to join the government yesterday.
Merkel’s party lost an election in Germany’s most populous state, helping the Social Democrats tighten their grip on the country’s regional governments.
National benchmark indexes fell in all of the 18 western- European markets. The U.K.’s FTSE 100 declined 2 percent. France’s CAC 40 lost 2.3 percent. Germany’s DAX dropped 1.9 percent. Greece’s ASE Index plunged 4.6 percent to the lowest level since November 1992.
A gauge of European banking shares was among the second- worst performer of the 19 industry groups in the Stoxx 600. HSBC tumbled 1.5 percent to 545.8 pence. Deutsche Bank AG and BNP Paribas SA dropped 4.1 percent to 29.88 euros and 3.7 percent to 27.62 euros, respectively.
Nokia Oyj declined 7.3 percent to 2.33 euros after Andy Perkins, an analyst at Societe Generale, downgraded the stock to sell from hold. This is the lowest price for stock since November 1996.
Lonmin Plc, the world’s third-largest platinum producer, slumped 5.2 percent to 854 pence after posting an unexpected first-half loss. The loss excluding one-time items was 6.9 cents a share in the six months through March. That compares with the median estimate for profit of 9 cents.
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