LONDON Feb 6 Euro zone equities sank to
two-month lows on Wednesday, with investors locking in profits
on a half-year rally, spooked by a run of weak corporate
earnings and signs of growing political tensions in the euro
France and Germany showed signs of disagreement over the
euro exchange rate, whose recent strength threatens corporate
profits and a nascent economic recovery in the region.
France said it would raise concerns about the euro at a
finance ministers' meeting next Monday, but expectations of any
action cooled after the spokesman for German Chancellor Angela
Merkel said the currency is not overvalued.
The apparent disagreement further fuelled concerns about
stability in the euro zone, adding to uncertainty over the
outcome of upcoming Italian elections and a corruption scandal
in Spain and prompting some investors to bank gains on a 25
percent rally in euro zone blue chips since June.
"It's probably quite a good time to take profits," said
Robert Quinn, chief European equity strategist at S&P Capital
IQ. "We're looking at a period of consolidation in the short
term and most of the visible risks seem to be at the beginning
of the year."
The EuroSTOXX 50 gauge of euro zone blue chips provisionally
closed down 1.1 percent at 2,621.59 points, its
weakest finish since early December and further retreating from
1-1/2 year peaks of 2,754.80 points set last week.