(03.07.2013) European stocks dropped

European stocks dropped the most in more than a week as Portugal’s coalition government splintered and crude oil surged above $100 a barrel amid rising unrest in Egypt.

Banco Espirito Santo SA and Banco Comercial Portugues SA both tumbled at least 12% as Portugal’s 10-year bond yield climbed above 8% for the first time since November.

Air France, Europe’s largest airline, dropped 3.9% to 6.58 euros. Deutsche Lufthansa AG slid 3.7% to 15.30 euros and International Consolidated Airlines Group SA, the owner of British Airways, declined 2.8% to 259.7 pence as oil rallied to a 14-month high

The Stoxx Europe 600 Index (SXXP) lost 1.2% to 283.8, extending the retreat from its 2013 high on May 22 to 8.6%. Portugal’s benchmark PSI-20 Index plunged 7%, the most since October 2008.

“Confidence in the risk space is under threat from re-emerging Portugal issues,” experts said. “Tension in Egypt is also causing oil prices to spike and this is generally negative for equities.”

The Stoxx 600 (SXXP) slid 0.4 percent yesterday after a report showed U.K. construction expanded less than forecast. Asian stocks fell today as China’s services-industry growth slowed in June. Data from the ADP Research Institute may show U.S. companies hired more workers last month.

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