Europe Stocks Drop for Second Week as Banks Fall to 16-Month Low

A slump in Spanish and Italian lenders sent European stocks down for a second week, the longest streak since October.

The Stoxx Europe 600 Index lost 1.3 percent to 337.93 at the close of trading in London amid concern that the European Central Bank’s bond-buying plans won’t be enough to shore up the economy, while a U.S. employment report showed a drop in hourly earnings. Today’s decline brought the measure down 1 percent for the week.

The ECB is studying models for buying as much as 500 billion euros ($ 591 billion) of investment-grade assets, a person familiar with the matter said. While the Stoxx 600 briefly erased gains after better-than-forecast U.S. jobs data, it then fell as much as 1.8 percent as earnings for all employees unexpectedly declined from a month earlier.

The Stoxx 600 reversed a two-day gain. It rallied the most in three weeks yesterday, erasing losses for 2015, amid speculation that weak inflation data this week bolster the case for the ECB to start sovereign-bond purchases at its Jan. 22 meeting. The benchmark gauge has posted gains in January in three of the past four years, data compiled by Bloomberg show.

Source : Bloomberg

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