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UPDATE 1-European shares fall as Spanish, Greek markets drop
May 11, 2012 / 2:22 PM / in 6 years

UPDATE 1-European shares fall as Spanish, Greek markets drop

* Athens market at levels of late 1992 when ERM crisis occured

* Spanish market falls as concerns remain over the country’s bank sector

* Losses trimmed after buoyant U.S. consumer confidence data

LONDON, May 11 (Reuters) - European shares fell to new intra-day lows on Friday, as plans to support Spain’s troubled banks failed to convince investors, and the Greek stock market dropped to levels last seen during Europe’s 1992 ERM crisis.

The Athens benchmark index was down by 4.5 percent, hitting its lowest level since late 1992, when a crisis in the European Exchange Rate Mechanism, known as ERM - a precursor to the creation of the euro currency - hit world markets.

The Madrid stock market also fell around 2 percent, with the European banking index down around 1.7 percent.

The FTSEurofirst 300 index fell by more than 1 percent to a fresh intraday low of 1,006.89 points, although the index later pulled back to show a 0.5 percent loss after the publication of positive U.S. consumer confidence data.

Spain’s economy minister on Friday said the country’s banks would have to increase their provisions against real estate assets and loans, and that public funds for the banks would be less than 15 billion euros, as part of a sector reform.

However, the plan failed to win over investors and traders.

“Provisions are lower than expected. Considering that they wanted to remove uncertainty from the market, that’s perhaps not such a good idea,” said a Milan-based trader, who declined to be named.

In Greece, political parties made a last-ditch attempt to avert a new election, as the country battles to remain within the euro zone.

The entire Athens bourse index is now worth around 20 billion euros, roughly a third of the size of French luxury goods company LVMH, or a quarter of oil major Total .

“The risk-on strategy is clearly off the table for now,” said Cavendish Asset Management fund manager Caroline Vincent.

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