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LONDON -- European equity indexes have been sliding lower this morning, paring all of yesterday's gains as weaker-than-expected European consumer sentiment data added to the continent's woes. The Spanish 10-year bond yield jumped through the key 7% mark, which most analysts suggest is an unsustainable level for the country, with the banking sector leading losses as the news regarding Barclays (NYSE: BCS ) Libor fixing spreads.
This all comes as doubts about the potential outcome of today's EU summit in Brussels continues to weigh in most markets, despite German Chancellor Merkel saying to reporters before the summit that a growth stimulation package would be at the heart of the debate today and suggesting that all those meeting are ready to agree on this package. The German DAX has still been one of the worst-performing indexes in Europe today, down about 1.6%.
As mentioned, the banking sector is seeing another day of severe losses in Europe as sentiment is further tainted since the U.K.'s Barclays was fined a record 290 million pounds for attempting to manipulate the Libor rate -- the interest rate, fixed daily by the British Bankers' Association, at which banks can borrow funds from other banks in the London interbank market.
Fears now grow that Barclays will prove not to be the only culprit in this scandal, which has rocked the industry as a whole. The U.S. Commodity Futures and Trading Commission is currently investigating more than 20 banks. All the European majors have been suffering on the back of this speculation, with Commerzbank leading losses, down more than 5% after it also announced it will be issuing new shares.
Industrials and chemical makers have been suffering this morning after U.K. chemical manufacturer Yule Catto announced that it is seeing severe falls in demand from both Europe and the U.S. The company noted that business from construction-related companies and its latex products have been the weakest areas. This has spread fear for the prospects of all the major European industrial majors, with Germany's Bayer one of the worst performers, down 1.5%.
On a more positive not, the Belgium insurer Ageas is making some of the largest gains across European bourses this morning, up more than 10% following news that Dutch firm ABN Amro will pay the company 400 million euros in a settlement over sharing costs related to units that made up Ageas' predecessor, Fortis. Ageas is set to get the funds by July 5, which will represent a 16 cent-per-share net income in its first half-year accounts.
Also on the upside, French media and communications company Vivendi has been making strong gains in Paris amid talk the company may be considering a breakup and growing expectations that CEO Jean-Bernard Levy is preparing to step down. Levy has been highly criticized by shareholders since the company's stock price reached nine-year lows and he failed to answer calls for a reorganization of the business.
As always, this morning's European news saw some winners and losers -- and perhaps some European buying opportunities. Indeed, legendary investor Warren Buffett has recently spent more than $1 billion buying the stock of a prominent European large cap. If you want to know why Buffett has bought into Europe, this special Motley Fool report -- "The One U.K. Share That Warren Buffett Loves" -- reveals everything, including the price Buffett paid. You can download the report today for free. But hurry -- the report is available for a limited time only.
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