European fears weaken shares

Page last updated at 03:39 GMT, Tuesday, May 8, 2012 - 08:39 EST

Reuters:

A trader reacts at his desk in front of the DAX board at the Frankfurt stock exchange May 7, 2012.

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However, markets were less volatile than on Monday when shares initially sold-off in reaction to the weekend's election results before ending the day higher, soothed by news that Spain was prepared to use public funds to help its troubled banks.

Spain is the euro zone's fourth largest economy and investors have focused on its troubles because it would be expensive to provide a bailout similar to the one supporting the much smaller Greek economy.

Greek voters punished the two mainstream parties in Sunday's vote for supporting the austerity conditions of the financial package and now the parties opposed to the bailout must try and form a government.

Financial markets are worried the election results in Greece and France, where president-elect Francois Hollande has also opposed drastic spending cuts, and the problems in Spain, could lead to a new phase of the crisis.

Read the whole story: Reuters