European shares led lower by banks on Portugal turmoil
LONDON, July 3 (Reuters) - European shares were dragged lower by banking stocks on Wednesday, after political turmoil in Portugal saw the country's bourse post its worst day in two years and threatened to reignite the euro zone debt crisis.
Fuelling the rush to the exit for many investors was a fresh batch of weak data overnight from China, which hit the mining sector, and political crisis in Egypt.
Euro zone banks fell 1.8 percent, the biggest sectoral faller, after the Portuguese government called emergency talks on its future. That pushed bond yields over 8 percent and sent the blue-chip PSI 20 down 5.2 percent.
Doubts over Greece's ability to fulfil the conditions of its bailout added to concerns about a debt-crisis flare-up.
The pan-European FTSEurofirst 300 provisionally closed 0.7 percent lower, down 7.74 points, at 1,151.03, with banks knocking 2.8 points off the index.
"Banks are down because of their exposure to the bond markets, and cyclicals are suffering too. What with everything that's going on in Egypt, and China overnight... it's a case of emerging markets weakening." Nick Xanders, who heads up European equity strategy at BTIG, said.
"Anything you've got that has emerging market exposure should be jettisoned. People keep trying to bottom-fish the miners, but that needs China to rebound dramatically, which I doubt they will."