Europe midday: Stocks fall on US and Eurozone fears

European stocks took a nosedive on Monday as concerns over the United States' credit rating infected investors' confidence.

At midday in Paris and Frankfurt the Euro Stoxx 600, which includes a large cross section of publically listed European companies, was down 2% at 227.35.

Some significant movers included Deutsche Bank (-5.01%) and Commerzbank (-4.88%) as yields rose on the key Spanish and Italian debt notes. The fear that one of the Eurozone's big economies could go bust still lingers in the markets.

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Exacerbating those fears today was news from the US that a cross party committee in Congress tasked with agreeing $1.2 trillion of budget cuts has failed to reach a consensus. That news could put further pressure on the US's already weakened credit rating.

Just after midday, Spanish 10-year bonds were yielding 6.53%, up 15 basis points on the open, as markets absorbed the election to power of Mariano Rajoy's People's Party, with an absolute majority in the Madrid Parliament. Italian debt has also risen since the open, up 3.7 basis points to 6.679% on 10 year debt.

Other companies investors seem concerned about include the French retailing giant Carrefour where the chief executive's position is said to be under threat after recent poor performances. The stock was down 1.9% in Paris. The French bank BNP Paribas also fell during the morning, down 4.74%.

On the main bourses, the DAX 30 was down 2.62% at 5,648 and in Paris the CAC 40 was down 2.46% at 2,923.

BS