London - A top European share index plunged to its lowest level in 2-1/2 years on Thursday, led down by a renewed slump in banks and miners, with Societe Generale sliding after disappointing results.
The pan-European FTSEurofirst 300 was down 3.4 percent at 1 199.01 points by 0848 GMT, slumping to its lowest level since August 2013.
It rose 1.8 percent in the previous session, snapping a 7-day losing run. But a 10.8 percent slump so far in February has the index set for its biggest monthly fall since 2008, and it is down 16.4 percent so far this year.
Banks were down 5.9 percent, the top sectoral faller. The sector is down over 10 percent so far this week as concerns over profitability in a low-growth, low-interest rate environment have knocked confidence in the sector.
The sector has lost 28 percent so far in 2016.
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The biggest faller in the bank sector on Thursday was Societe Generale, down 12.8 percent after it posted a lower than expected rise in fourth-quarter net income, hit by an additional 400 million euros ($450.4 million) that it set aside to cover litigation costs.
Swedish banks such as Svenska Handelsbanken, Swedbank and Nordea Bank were down 3.6-5 percent, extending falls after Sweden's central bank cut its benchmark repo rate by 15 basis points to -0.50 percent.
Negative rates have hit banks ability to earn margins on interest rates and are one of several issues facing the sector.
“The sector as a whole is untouchable,” said David Madden, market analyst at IG, said.
Rio Tinto dropped 5.4 percent after the miner posted an annual loss and scrapped its promise to maintain or lift its dividend annually for this year onward due to a tough outlook.
The basic resources sector was down 5 percent.
“The most important thing out of Rio Tinto's update is the change in dividend policy ... Its dividend yield had been a redeeming feature of the stock, even as commodities slumped, so now there's tremendous pressure on the share price,” IG's Madden said.
“The rate of dividend cuts at the moment is higher than in 2008. Commodity companies have been at the centre of this, but this has the potential to move out of that sector in a broader market move.”
REUTERS