European shares fall on U.S. debt default concerns

LONDON: European shares fell on Monday, July 25 from their highest in
more than a week in the previous session as investors cut riskier
assets on the possibility of a first-ever U.S. debt default after talks
between Democrats and Republicans again collapsed.

At 0704 GMT, the FTSEurofirst 300 index of top European shares was
down 0.6 percent at 1,102.33 points after closing 0.5 percent higher on
Friday.

U.S. President Barack Obama and congressional leaders have tried to
reassure global markets that the country will be able to service its
debt and meet other obligations after Aug. 2, when the Treasury
Department will have exhausted its reserves.

"The markets were hopeful that by now something would have been
agreed. I don't think a U.S. debt default has been completely ruled out
by the markets," said Keith Bowman, equity analyst at Hargreaves
Lansdown.

"At the end of the day, there is a huge amount of politics being
played out. Investors are anxious to see some sort of agreement
finalised. The results season has been a little bit better than a lot of
people thought, but we would certainly like to see the U.S. debt
situation put behind us."

A Moody's downgrade of Greece's sovereign debt ratings by three
notches also hurt sentiment. The ratings agency said the country still
faced serious medium term solvency challenges despite the fresh bailout
package.

Financial stocks were among the top losers, with the STOXX Europe
600 banking index falling 1.3 percent. Dexia fell 5.4 percent, while
UniCredit dropped 4.5 percent. - Reuters