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European shares fall on Spain jitters
May 30, 2012 / 7:17 AM / 6 years ago

European shares fall on Spain jitters

LONDON, May 30 (Reuters) - European shares fell in early trade on Wednesday and remained on track for their third straight month of losses as jitters over Spain’s struggling banking sector and the country’s rising borrowing costs hurt sentiment.

At 0710 GMT, the FTSEurofirst 300 index of top European shares was down 0.9 percent at 982.36 points, after gaining in the previous session. The index has fallen nearly 6 percent so far this month.

“We have seen that the U.S. and the UK have made substantial moves in terms of recapitalising their banks. The difficulty is, the longer you leave it, the more difficult fund raising becomes and that’s what Spain is finding now,” Keith Bowman, equity analyst at Hargreaves Lansdown, said.

“There have been some requests for the bailout fund to be used to help Spanish banks to recapitalise, but the difficulty for the European Central Bank (ECB) is to know where that stops. There are a lot of people who would even question whether the bailout fund is big enough to rescue Spain.”

ECB policymaker Ewald Nowotny said on Tuesday it was up to national governments, not the European Central Bank, to rescue any banks that get into trouble, adding that the central bank was not discussing restarting its bond purchases or preparing to cut rates.

European banks, down 1.3 percent, were among the top fallers, with Banco Santander down 2.4 percent and BBVA 2.2 percent weaker.

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