Europe Shares Seen Dropping on Spain Worries

European shares are called to open lower Wednesday as Spanish banking worries drag on investor sentiment.

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The FTSE 100 is expected to open lower by 27 points, the DAX is seen lower by 10 points and the CAC is seen down by 18 points.

The Financial Times is reporting that the European Central Bank has blocked a Spanish plan to recapitalize Bankia, the troubled lender, by that would have indirectly tapped the ECB for funds. European officials told the paper that the ECB had told Spain that proper capital injection was needed for the bank and that its plans were in danger of breaching an ECB ban on “monetary financing.”

Spain’s borrowing costs have been the cause of intense concern in recent days as they near the crucial 7 percent level, a range that forced other countries to seek international financial aid.

In Greece, latest opinion polls for the upcoming elections, scheduled for June 17, show pro-bailout parties inching ahead of Syriza, the leftist anti-bailout party, but still too close to predict a decisive winner.

Euro zone debt worries are likely to see Italy’s borrowing costs edging higher Wednesday when the country tenders up to 6 billion euros ($7.5 billion) in five- and 10-year bonds at 10:00 a.m. BST (5:00 a.m. New York time).

The massacre of over 100 civilians in Houla, Syria, saw Western powers united in expressing their outrage at the Syrian government by expelling diplomats. The anger has been particularly pronounced because almost half those murdered were children. UN peace envoy Kofi Annan met with Syrian President Bashar Al-Assad, who has denied his regime’s involvement in the massacre, Tuesday to express his concerns.

Facebook shares fell to a new low below $29 as investors fled the social network’s stock over concerns of an unrealistic valuation at its float and worries about its long-term viability. Facebook debuted on the market at $38 a share.