European stock markets slide
The price of safe-haven gold gained to $1,288.50 an ounce from $1,284.75.
LONDON (AFP) - Europe s stock markets fell sharply on Wednesday, knocked by concerns that recent rises may have been sharper than warranted against a backdrop of conflict in Ukraine and fresh banking strains.
The euro briefly fell to an eight-month low point against the dollar amid concerns about the health of the eurozone economy.
Traders said sentiment had also been hit by news that several huge mergers had collapsed, including 21st Century Fox s bid for Time Warner and also Sprint and T-Mobile.
"A perfect storm of low volumes, geopolitical worries and pulled mergers is conspiring to keep markets on the back foot," said Chris Beauchamp, market analyst at IG trading group.
After two days of gains, London s benchmark FTSE 100 index dropped 1.16 percent to stand at 6,604.64 points in mid-afternoon trading.
Frankfurt s DAX 30 slid 0.87 percent to 9,074.75 points and in Paris, the CAC 40 index shed 1.03 percent to stand at 4,189.07, compared with Tuesday s close.
The overall Lisbon PSI stock index of 18 companies fell 4.22 percent to 5,570.81 points, pulled lower by the banking sector in the wake of the collapse of BES bank.
The Italian stock market dropped 2.44 percent after official data showed Europe s third-largest economy slid back into recession in the second quarter.
Adding to concerns about the health of the eurozone, data showed that industrial orders in its largest economy Germany fell in June, weighed down by declining foreign orders amid fears about Ukraine.
Investors dived into the perceived safe haven of German bonds seeking safety from the geopolitical pressures, pushing down the country s borrowing costs to the lowest-ever interest rate of 1.103 percent.
A first air strike hit the main rebel stronghold of Donetsk in east Ukraine Wednesday, as government forces preparing to retake the city said 18 soldiers were killed in clashes with pro-Moscow rebels.
The crisis in Ukraine has seen tensions between Russia and the West hit their worst point since the end of the Cold War, with the US and European Union slapping punishing sanctions on Moscow over its alleged support for the rebels.
"The unease created by last week s sell-off has left investors looking for reasons to sell shares, so when Russia built back up the number of troops on its border with Ukraine it sparked fears of a possible invasion and stocks fell," said Jasper Lawler, a market analyst at CMC Markets.
- US stocks sour -
US stocks opened lower, hit by concerns about rising tension in Ukraine and as several prominent potential corporate deals fizzled.
Five minutes into trading, the Dow Jones Industrial Average declined 0.25 percent to 16,388.63.
The broad-based S&P 500 shed 0.38 percent to 1,912.85, while the tech-rich Nasdaq Composite Index fell 0.48 percent to 4,331.91.
In foreign exchange trading, the euro was lower at $1.3351 compared with $1.3375 late in New York on Tuesday.
Earlier on Wednesday, the European single currency reached its lowest level since November last year, at $1.3349.
The euro rose to 79.25 pence from 79.21 pence on Tuesday. The pound slid to $1.6847 from $1.6884, with the British currency hit by weaker-than-expected manufacturing data, according to traders.
On the London Bullion Market, the price of safe-haven gold gained to $1,288.50 an ounce from $1,284.75.
Traders were meanwhile awaiting interest rate decisions from the European Central Bank and Bank of England due on Thursday.
Standard Chartered, the emerging markets bank, confirmed it faces fresh US fines over alleged breaches of money-laundering regulations, as it announced also a rise in first-half net profits.
The London-listed bank s share price fell 1.36 percent at 1,200 pence.
Traders zoomed into the car sector after China stepped up pressure on foreign makers in the world s biggest auto market, pledging to punish Germany s Audi and Chrysler of the US for "monopoly behaviour".
In afternoon deals, Volkswagen shares fell 3.06 percent to 164.80 euros while Renault shares lost 3.26 percent in Paris.
