UK stocks : Euro zone shares at 2-mth lows on political tensions
Implied volatility on the EuroSTOXX 50, seen as a crude barometer of investor risk aversion, jumped 5 percent. The stock rally's top performers turned in to the biggest losers, with euro zone banks, which had surged nearly 13 percent in January, off 1.6 percent on Wednesday. The sector also tends to be the most sensitive to turns in the euro zone sentiment due to their sovereign bond holdings.
"There is a financial sell programme in the market this afternoon and the EU ex UK banks index broke the 50 day moving average, which triggered stop-loss selling," said a trader.
Corporate reports added to the cautious mood, French builder Vinci warning of a flat 2013 for its construction and concessions businesses, while both Swedish lender Handelsbanken's and farm chemicals maker Syngenta undershot expectations on operating profit.
So far, half of euro zone's large and mid-cap companies have missed full year earnings forecasts, prompting analysts to cut their 2013 expectations by 1.9 percent over the past month, according to Thomson Reuters StarMine. The UK looks relatively healthy in comparison, with only 32 percent of misses.
"The risk for earnings downgrades in the European equity space is relatively higher, given both ... the slightly elevated level of the consensus estimate - and also the short to
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