European Shares Dip as Spain Concerns Weigh

European equity markets weakened on Wednesday as the boost given by speculation over further Federal Reserve monetary easing faded and investors became jittery once again about Spain’s finances.

The pan-European FTSEurofirst 300 fell 1.99 points, or 0.2 percent, to 1,081.55 by 09:11 SA time, extending its 0.5 percent drop from the previous session, while Spain’s IBEX led regional fallers, down 0.4 percent.

Traders pointed out that FTSEurofirst index could be hit by more profit-taking, having jumped about 8 percent in the year to date, on track to record its best first-quarter performance since 1998.

Spain returned to the forefront of traders’ minds as the government gets set to unveil later in the week a budget which will include around 20 billion euros in savings – without breaking its promise to not raise income tax or value added tax.

Spain is believed to have already entered its second recession in three years and Prime Minister Mariano Rajoy has pledged to meet a deficit target of 5.3 percent of gross domestic product in 2012 following a one-month spat with the European Commission.

“Fundamentally there are still unanswered questions about some of these European countries. Unless we hear a guaranteed QE3 from Bernanke, (the market) might be a little bit choppy for the next week or so,” Mark Priest, trader at ETX Capital, said. – These news has been reported by Reuters.