European Stocks’ Slump

European stocks dipped Thursday as investors still wait for Greece to secure a second bailout, and the prospect of further downgrades for the region’s banks damaged confidence.

The benchmark Stoxx Europe 600 Index was 0.9% lower at 261.84. Regionally, London’s FTSE 100 and Paris’s CAC-40 also fell 0.9%, to 5841 and 3360.88, respectively, while Frankfurt’s DAX was 1.3% lower at 6671.30.

Bank shares took a hammering, with the Stoxx Europe 600 index for the sector down 2.2% after Moody’s Investors Service placed various ratings of 114 financial institutions in 16 European countries on review for possible downgrade, pointing to vulnerability to the euro-zone sovereign debt crisis. Among those affected wereBarclays, BNP Paribas, Commerzbank, Crédit Agricole, Deutsche Bank, HSBC, ING Greop, Royal Bank of Scotland, Santander, Société Générale and UniCredit.

Fourth-quarter earnings from Société Générale added to the sector’s woes Thursday. SocGen shares fell 3.6% after the company said net profit for the quarter tumbled 89% to €100 million ($1.3 million), against expectations of a drop to €261 million. The bank said it took further write-downs on its Greek sovereign bonds and booked major losses on U.S. mortgage-backed securities. Commenting on the loss on mortgage-backed securities, Espírito Santo Investment Bank said: “This will be taken negatively as management has consistently tried to assure the market that an independent BlackRock valuation of the assets in the portfolio had implied a fair value higher than the current book value.”

Sticking with financials, shares of French insurer AXA weren’t faring too well either. The stock dropped 3.2% after its full-year results. AXA posted a 57% jump in net profit to €4.32 billion, but this was from a relatively low base and came in below analysts’ expectations of €5.60 billion.

Meanwhile, worries about Greece continued to plague the market. Since the cancellation of Wednesday’s meeting of euro-zone finance ministers, which has been put back to Monday, headlines about Greece have done little to inspire investor confidence. Euro-zone officials are considering a delay to all or part of Greece’s second bailout package until after the country’s general election, which is expected to take place in April. In order to avoid a default, however, a bridging loan is being considered, which would allow Greece to meet is €14.4 billion repayments by March 20.