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European shares down by 8 percent led by French telecoms and Italian banks

European shares down led by French telecomsThe European shares shed losses as updates in the global market was released around 1431 GMT today after it rose 1.3 percent in the previous data as Fed Chair Janet Yellen announced the possibility of another rise in the Federal Reserve’s interest rate. The pan-European FTSEurofirst 300 index was down 1.1 percent on Thursday, March 31, due to the underperformance of French telecoms and Italian banks.

Data shows that the Orange and Bouygues Telecoms are listed as the worst market performers where shares fell 1.2 percent and 3.4 percent respectively. This is after they fail to salvage a merger with France’ dominant telecom operator. Another French rival telecom company is sharing the same fate as Iliad dropping 2.1 percent, Numericable-SFR down 1.9 percent and Altice down 0.9 percent.

Aside from those telecom companies mentioned above, shares in Italian banks contributes hugely in the fall of the European shares as three sources told Reuters that guarantor UniCredit was considering whether to delay Banca Popolare di Vicenza’s 1.76 billion euro ($2 billion) rights issue, currently slated for April, if markets did not improve. This data can be seen in the Reuters report dated March 31, 2016. This fund-raising is known as a vital test in determining investor’s trust and confidence in the Italian banks current state. Banca Popolare di Vicenza is reported to have shares sold off sharply this year to address concerns of about 360 billion euros of bad loans clogging in their balance sheets.
According to ICBPI analyst Luca Comi in a note, “Investors fear that the recapitalization of Popolare di Vicenza may end up with a large portion of unsubscribed rights, forcing the UniCredit to take up a great part of it”.

Although the European market had recovered from its lows in February after Fed Chair Janet Yellen commented on Fed’s possible rate hike last Tuesday, still, the FTSEurofirst 300 index is down by around 8 percent since the start of 2016. Being the second biggest economy in the world, concerns about the slowdown in China’s economy had affected other part of the global economy including that of Europe.

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