European stocks affected by fears over EU summit

Published:  26 Jun at 6 PM

Italian and Spanish shares have dropped sharply with fears that the EU summit taking place this week will fail to create a deal to save the euro. The shares’ main indexes finished down by around 4 percent as Spain’s prime minister urged summit leaders to "dispel doubts" over the single currency.

The US stock market was unsettled by the roaring crisis, as the Dow Jones finished with a 1.1 percent loss. Previously, Spain formally made a request for a loan to bail out its banking sector.

Countries in the Eurozone have decided to lend Spain's banks up to 100 billion euros. No specific numbers were given for the urgent loans, though last week’s independent audits stated that the banks required up to 62 billion euros to get stabilised.

The drops in Spain’s stocks were reflected across Europe with Germany's Dax down 1.9 percent, France's Cac 40 down 2.2 percent, and Italy's Mib down 4 percent. The drops were worsened by a report that Moody's credit agency was ready to downgrade banks in Spain.

Another sign of worsening problems facing the EU, Cyprus has requested financial aid from European authorities. A government statement said that the purpose of the required aid is to check any dangers to the Cypriot economy, especially those caused by the negative side effects from its exposure in the weak Greek economy.