European stocks drop as financials decline; DAX down 0.5%

Forex Pros – European stock markets were broadly lower on Monday, as shares in the financial sector led losses amid concerns over the region’s ongoing debt crisis, while U.S. futures indexes pointed to a lower open on Wall Street.

During European morning trade, the EURO STOXX 50 sank 0.85%, France’s CAC 40 dropped 0.7%, while Germany's DAX 30 slumped 0.5%.

Shares in the financial sector performed poorly amid speculation over Greek debt restructuring and after Finland's anti-euro party, True Finns made big gains in the country’s parliamentary election on Sunday, raising the risk of disruption to a euro zone bailout plan for Portugal.

Europe’s third largest banking group Societe Generale dropped 3%, shares in Spain’s biggest lender Banco Santander fell 2.25%, while Italian banking giant Unicredit saw shares slump 2.2%.

Shares in Italy’s largest phone company Telecom Italia tumbled 5.1% after it said it would increase its fixed-line monthly fee by 2.5% to EUR16.5 per month and apply new rates starting July 1. 

Meanwhile, Swiss medical-device manufacturer Synthes saw shares surge 6.8% after it confirmed it was in talks with Johnson&Johnson. The Wall Street Journal reported on Friday that J&J was looking to buy Synthes in a deal that could be valued at roughly USD20 billion. 

Shares in Dutch consumer electronics giant Philips added 0.5% after it reported first quarter revenue rose 5.5% to EUR5.26 billion. The company said it expected "headwinds in 2011 due to the Japan tragedy, impacting our revenue and supply chain."

In London, the FTSE 100 shed 0.3% as shares in Barclays dropped 1.9% after the Sunday Telegraph reported that a group of investors, which together hold more than 10% of its equity, have told the board they would prefer the British bank to be domiciled outside of the U.K.

Shares in Lloyds Banking Group fell 1.45%, while Royal Bank of Scotland saw shares slide 1.2%.

The outlook for U.S. equity markets, meanwhile, was downbeat ahead of earnings reports from Citigroup and semiconductor manufacturer Texas Instruments.

The Dow Jones Industrial Average futures pointed to a drop of 0.3%, S&P 500 futures indicated a loss of 0.4%, while the Nasdaq 100 futures shed 0.35%.

Later in the day, Federal Reserve Bank of Dallas President Richard Fisher was due to speak at two events in Atlanta.

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