EUROPEAN stocks fell yesterday, led by insurers on expectations a huge hurricane in the United States would boost damage claims, while political jitters in debt-laden Italy cast shadows on the Eurozone.
Reinsurers Swiss Re and Hannover RE led a weaker European insurance sector index as the market tried to predict the cost of cleaning up after Hurricane Sandy, which has forced Wall Street to shut.
Eurozone blue chips shed 0.7 per cent to 2,478.84 points after former Prime Minister Silvio Berlusconi threatened to bring down his successor Mario Monti’s government, which has appeased financial markets with its austerity agenda.
Italy’s FTSE MIB fell 1.5 per cent, the worst performer in western Europe, weighed down by banks, which have the largest exposure to the country’s debt. The Euro STOXX 50 volatility index, which gauges option prices on euro zone blue chips and is regarded as a measure of investor fears of future price swings, rose 4.9 per cent to 23.22 points.
The index has risen 21 per cent from a six-month low hit in mid-September, when the European Central Bank and the US Federal Reserve had calmed markets with plans to tackle the euro crisis and shore up the U.S. economy, respectively. It was still well below a 2012 high of 38 hit in early June.
A profit warning from Japan’s Honda Motor triggered a sell-off in the European auto sector, with France’s Peugeot shedding seven per cent and Germany’s Daimler down 1.8 per cent.
The pan-European FTSEurofirst 300 closed 0.3 per cent lower at 1,093.57 points in volume 62 per cent of its 90-day average as Wall Street was closed.