Equity markets fall as debt crisis casts doubt on euro

EUROPE

European equity markets have fallen sharply over the last couple of months as investors have reacted to the Greek sovereign debt crisis

The financial sector has been particularly hard hit as sovereign debt worries and the coming imposition of Basel III regulations have negative implications for the solvency and profitability particularly for the banks. Calls for greater regulation of the financial markets by France and Germany has served to further depress financial company valuations. There are signs in this more uncertain economic and financial environment the cost of borrowing is picking up with inter-bank rates and credit spreads beginning to rise, which could further impede economic growth. Despite this, the econ...