European shares extended a losing run to six days on Wednesday as worries about the nuclear crisis in Japan and unrest in the Middle East intensified, and banks fell after Portugal's sovereign debt was downgraded. The pan-European FTSEurofirst 300 index of top shares fell 1.6 percent to 1,067.26 points, its lowest close in three and a half months. The index is down more than 10 percent from its 2011 peak of a month ago.
Japan's devastating earthquake and deepening nuclear crisis could result in losses of up to $200 billion for the world's third largest economy but the global impact remains hard to gauge five days after a massive tsunami battered the north-east coast. The heavyweight banking sector was among the worst performers after Moody's downgraded Portugal's sovereign debt rating overnight. BNP Paribas, Banco Santander, BBVA, Intesa SanPaolo and Societe Generale fell between 2.6 and 5.4 percent.
Stocks on the rise were in a small minority but Statoil, up 2.9 percent, was among the gainers as crude prices rose more than 2 percent to above $110 a barrel. Investor attention turned to the Middle East again as a crackdown on protesters in Bahrain resulted in the deaths of four people, according to hospital sources and violent clashes erupted in Yemen.
Investor appetite for risky investments weakened further as the VDAX-NEW volatility index, one of Europe's main barometers of anxiety, soared 13.3 percent. The higher the volatility index, based on sell- and buy-options on Frankfurt's top-30 stocks, the lower the appetite for risky assets such as stocks. Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC 40 fell between 1.7 and 2.2 percent. The Thomson Reuters Peripheral Eurozone Countries Index fell 2.6 percent.