Europe stocks decline as banks lead Greek, Italian shares lower

By Inyoung Hwang

European stocks fell, erasing earlier gains, as lenders sent Greek and Italian stocks lower.

The Stoxx Europe 600 Index fell 0.4 percent to 394.74 at 11:46 a.m. in London, reversing an earlier gain of as much as 0.6 percent. Banca Monte dei Paschi di Siena SpA and Alpha Bank AE fell more than 2.3 percent, dragging Greece?s ASE Index and Italy?s FTSE MIB Index down more than 1.5 percent.

?There will be Eureka moment for equities down the line, but for now the market is going to church praying the issue with Greece will go away,? said Steen Jakobsen, chief investment officer at Saxo Bank A/S in Hellerup, Denmark. ?There?s an awareness of the lack of a Plan B with Greece.?

Greece?s ASE lost 1.5 percent, with a gauge tracking its lenders falling 3 percent. The nation?s banks are running short on the collateral they need to stay alive as lenders use collateral parked at the Greek central bank to tap more and more emergency liquidity in a lifeline that could be maxed out within three weeks.

Italy?s FTSE MIB lost 1.6 percent following two weekly gains. Monte dei Paschi fell as much as 5.8 percent.

Stoxx 600 automakers rose, with Porsche Automobil Holding SE and Volkswagen AG climbing more than 2.2 percent as the euro weakened. The moves sent Germany?s DAX Index up as much as 1.2 percent before it traded little changed. German shares were the biggest decliners after Greek stocks last week.

Fresnillo Plc and Randgold Resources Ltd. climbed more than 1.5 percent as gold advanced for a fifth day.

Swiss Stocks

The Swiss Market Index climbed 0.2 percent, posting the largest gain among western-European gauges. Swatch Group AG rose 2.6 percent as Credit Suisse Group AG raised the stock to the equivalent...