European shares at 3-wk low on Italy, Cyprus concerns
LONDON, March 27
LONDON, March 27 (Reuters) - European shares fell to a 3-week closing low on Wednesday, after poor demand at an Italian debt auction added to concern about the size of a potential run on Cypriot banks when they reopen on Thursday.
The FTSEurofirst 300 index of top European shares provisionally finished down 0.3 percent at 1,184.53 points, the lowest close since early March. However, it remained on track for a tenth straight month of gains, the best performance ever.
"The sell-off is likely to continue in the near term. It looks like there will be no government in Italy for some time and uncertainty in the euro zone's third-largest economy will continue for another four to five months," Ronny Claeys, senior strategist at KBC Asset Management, said.
Concerns about Italy were reflected in its latest debt auction, which saw soft demand. The 10-year bond drew bids worth 1.33 times the amount allocated, versus an average of 1.48 times so far this year, prompting Italian bond yields to rise.
Uncertainty over the scale of capital controls being readied for Cypriot banks when they reopen on Thursday, for the first time since the country agreed a bailout deal last week, also prompted investors to trade cautiously, analysts said.