MADRID (MarketWatch) — European stock markets pushed lower on Thursday, with banks out in front of the losses, amid a Spanish bond auction that showed rising borrowing costs, while persistent worries about Greece overshadowed the market, .

The Stoxx Europe 600 index XX:SXXP -1.05% extended an earlier fall, off 0.7% to 242.55, en route to a fourth-straight day of losses. Germany is observing a public holiday, though markets are open, while Swiss and most Nordic markets are closed for a holiday.
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Stocks suffer fourth-straight drop

The Dow Jones Industrial Average fell for a fourth-straight day as confusion over Greece’s political future trumped firm U.S. economic data. Chris Dieterich has details on The News Hub. Photo: Reuters.

Stoxx and FTSE 100 index UK:UKX -1.38% heavyweight Vodafone Group PLC VOD -1.98% UK:VOD -.00% fell 1.3%. Chief Executive Marten Pieters said Thursday the company plans to list its Indian venture on a local exchange, but no date is set yet.

Spanish stocks came under pressure after data showed a 0.4% fall in gross domestic product in the first quarter on an annual basis.

As well, at an auction of shorter-dated bonds, the Spanish government raised its desired maximum amount, but had to pay much higher costs. Yields for the 10-year Spanish government bond ES:10YR_ESP +0.53% rose 2 basis points to 6.28%, according to FactSet Research. Read more on Spanish bond auction

The Spain IBEX 35 index XX:SXXP -1.05% fell nearly 2% to 6,487, led by a 4% tumble for BBVA SA BBVA -0.81% ES:BBVA -3.39% and a 3.3% fall for Banco Santander SA ES:SAN -2.52% STD -2.41% .

Markets remain unnerved by Greece contagion to Italy and Spain, said Nicolas Spiro, managing director of Spiro Sovereign Strategy. “The Greek crisis is placing huge strain on peripheral euro-zone bonds and European bank shares. Spain is on the sharp end of these fears,” he said in e-mailed comments.

“The Spanish government itself can do very little to shore up confidence in the near term. Unless there is a bold and decisive response on the part of the euro zone, sentiment towards Spain will deteriorate further. This is a very slippery slope right now,” said Spiro.

Added Atif Latif, director of trading at Guardian Stockbrokers, in e-mailed comments: “Market concern suggests that bank exposure seems to potentially be the main reason for the weakness and short-term performance will depend on the action from politicians that are now badly needed.

“There is some chatter on a collective central bank meeting to make a market statement on the best way to deal with this crisis,” he said.

The Athens General Index GR:GD -2.02% fell 1.7% to 545.99, while the FTSE MIB Italy index XX:FTSEMIB -2.03% dropped 2% to 12,994.70, with shares of UniCredit SpA IT:UCG -5.35% down 4.3%.

Yields on Italy’s 10-year government bonds IT:10YR_ITA +0.51% rose 11 basis points to 5.83%, according to FactSet.
Resources, banks slip

Markets were hoping for a bounce on Thursday owing to overseas factors. “With positive comment from the Federal Reserve overnight about further easing if required, plus Japan’s first-quarter GDP coming in at 4.1%, the performance of equities offered some hope to Europe,” said David Buik, markets commentator at BGC Partners, in e-mailed comments.

“But Greece came and took the wind out of its sails yet again and will continue to do so until attempts are made to crystallize the problems and deal with them,” said Buik.

The French CAC 40 index FR:PX1 -1.15% fell 0.9% to 3,021.45, with Credit Agricole SA FR:ACA -3.99% down 4.5% and Societe Generale SA FR:GLE -3.61% losing 3.9%.

The German DAX 30 index DX:DAX -0.94% fell 0.6% to 6,347.91, with Deutsche Bank AG DE:DBK -4.08% DB -1.86% down 2.5% and Allianz SE DE:ALV -2.81% dropping 1.8%.

The FTSE 100 index UK:UKX -1.38% fell 1% to 5,348.21, as Vodafone fell and banks and resource stocks came under pressure. Shares of BP PLC BP 0.00% UK:BP -1.45% lost 1%, while Royal Dutch Shell PLC RDS.B -0.33% UK:RDSB -1.73% fell more than 1%.

Miner Xstrata PLC UK:XTA -4.19% dropped 3.6%. UK:RDSB -1.73% UK:RDSB -1.73%

Barclays PLC UK:BARC -4.07% BCS +0.93% slid 4% and Standard Chartered PLC UK:STAN -2.71% dropped 2.2%.