Europea's Markets Feel Own Pain
BRUSSELS--European markets enjoyed letting the U.S. debt-ceiling circus steal the spotlight. It didn't last long.</br></br>Markets across the Continent slumped Monday, a reminder that the euro zone's own debt woes remain far from resolved. Stocks in Italy, the currency union's second-most indebted country after Greece, were particularly hit hard. The Milan bourse slumped 3.9%, and bank shares were among the biggest losers. Banco Popolare SC and Intesa Sanpaolo SpA both closed down almost 8%.</br></br>Italy's government bonds also weakened; the yield on the 10-year bond rose 0.12 percentage point, to 5.987%, compared with 2.469% for 10-year German bunds.</br></br>European trading began Monday on a relatively optimistic note after news that a debt-ceiling deal was at hand in the U.S. But investors soured over the course of the day, and stocks accelerated their fall near the end of trading when the Institute for Supply Management released weak manufacturing figures in the U.S. The U.K.'s FTSE 100 lost 0.7%, the German DAX dropped 2.9% and France's CAC-40 shed 2.3%.</br></br>Besides Italy, Spain--another worrying spot in the euro zone--also had a rough day; the Madrid stock market closed down 3.2%. Some of the nervousness in Europe relates to fears about the health of the U.S. economy, but significant concern remains that policy makers' recent efforts to bolster Greece and implement measures to backstop the rest of the euro zone aren't convincing.