European shares lower

European shares fell on Wednesday for the second consecutive session as eurozone purchasing managers data suggested the region could tips into recession and potentially have a knock-on effect to company profits. Investor sentiment took a hit after the Markit's Eurozone Services Purchasing Managers' Index (PMI) missed forecasts, raising questions about whether Greece can recover from its economic slump and implement the austerity measures required under its fresh bailout programme.
"The PMIs suggest there is going to be a slow period of economic growth, which opens the danger of weak profits," said Richard Batty, strategist at Standard Life Investments, which has $248.37 billion of assets under management. Greece, which received its long-awaited bailout deal early this week, was also knocked by Fitch downgrading its long-term ratings following its debt swap plan for private creditors.
The Athens General exchange was the worst performing on the budget cuts and Fitch downgrade worries, with its main index falling 5.7 percent in strong volume at 158.3 percent of its 90-day daily average. Volume was brisk in Greek banks which were the hardest hit on the index, falling 12.7 percent, on concerns they will have to raise more capital than expected after the debt swap plan is implemented.
EFG Eurobank, Alpha Bank and National Bank of Greece were the standout losers, down 12.7 to 17.1 percent. The pan-European FTSEurofirst 300 index of top shares closed down 0.8 percent at 1,077.07 points for the second day after gaining 1.8 percent last week, although volume was low at 81.4 percent of its 90-day daily average. Traders said short sellers cutting their positions in PSA were another factor behind the sharp rise.
PSA was the fourth most shorted stock on France's CAC 40, according to Data Explorers, with nearly 7 percent of the company's shares out on loan, while buy-and-hold investors have been favouring rival Renault. Colin McLean, managing director at SVM Asset Management in Edinburgh, said he was also investing in stocks which had the potential for a short-squeeze and had Weir Group in his portfolio.