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European stocks dropped the most in more than a week as Portugal's coalition government splintered and crude oil surged above $100 a barrel amid rising unrest in Egypt. Asian shares and U.S. index futures also declined.
The Stoxx Europe 600 Index (SXXP) lost 1.2 percent to 283.8 at 9:57 a.m. in London, extending the retreat from its 2013 high on May 22 to 8.6 percent. Portugal's benchmark PSI-20 Index plunged 7 percent, the most since October 2008. The MSCI Asia Pacific Index slumped 1 percent and S&P 500 Index futures slid 0.6 percent, after the benchmark gauge closed lower yesterday.
The Stoxx 600 (SXXP) slid 0.4 percent yesterday after a report showed U.K. construction expanded less than forecast. Asian stocks fell today as China's services-industry growth slowed in June. Data from the ADP Research Institute at 8:15 a.m. New York time may show U.S. companies hired more workers last month.
Espirito Santo, Portugal's biggest bank by market capitalization, tumbled 12 percent to 53.8 euro cents, its biggest drop since April 2012. Comercial Portugues plunged 15 percent to 7.9 euro cents, the most since June 2012. The country's bonds slumped, pushing the 10-year yield above 8 percent, as two ministers resigned amid austerity fatigue.
Prime Minister Pedro Passos Coelho said in a televised speech yesterday he's trying to hold his government together after losing both his finance minister and his foreign minister.
Secretary of State for Treasury Maria Luis Albuquerque replaced Vitor Gaspar at the Ministry of Finance. That prompted Paulo Portas, who leads the smaller CDS party in the coalition government, to quit, saying the new minister would offer "mere continuity" of the country's deficit-cutting plans.
Banks in Europe fell as Standard & Poor's cut long-term counterparty credit ratings for Barclays and Deutsche Bank to A from A+. Credit Suisse Group was lowered to A- from A.
Barclays declined 3.8 percent to 272.4 pence, Deutsche Bank dropped 3.5 percent to 30.80 euros and Credit Suisse slid 2.9 percent to 24.96 Swiss francs.
FTSE 100 6,206.67 -97.27 -1.54%
CAC 40 3,683.17 -59.40 -1.59%
DAX 7,788.61 -122.16 -1.54%
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