Banks led European shares lower on Monday, giving up some of last week's hefty gains as demand for detail on the recent euro zone debt deal teed up a weak end to a bumper month, with the broader market on course to snap a five-month losing streak.
French banks were among the top fallers, with Credit Agricole down 6.3 percent after gaining nearly 30 percent last week, and both Societe Generale and BNP Paribas more than 6 percent lower.
The sector weakness left the French blue-chip CAC-40 lagging regional peers around midday, down 1.9 percent, while the STOXX Europe 600 Euro Zone Banks index .SX7E fell 4.3 percent.
Technical factors contributed to the slide -- with both the CAC-40 and STOXX Europe 600 Banks index .SX7P showing overbought Relative Strength Indexes after last week's rally -- while rising peripheral euro zone debt yields also weighed.
Debt deal questions remain, particularly in how it will be funded, and Keith Wade, strategist at Schroders, said he was not convinced investors would buy into an insurance-type scheme to leverage the region's bailout fund, the EFSF.
Given the way we've had voluntary defaults and not triggering CDS, and effectively now the euro zone is going to be writing a CDS ... given their record, people will think that's not worth the paper it is printed on.
In spite of Monday's fall, however, Wade said there was scope for good news to come through from a meeting of the Group of 20 leaders later this week, with many hoping cash-rich nations like China will use large foreign exchange reserves to help bolster the key European end-user market.
In terms of extra support for the EFSF, with China likely to hint that they'll make some support, and possibly even greater IMF participation. There could still be a reasonable flow of good news to support equity markets, which you must remember came from very depressed levels.
Comments from potential investors like China and Japan have been cautious ahead of the meet, however.
At 7:45 a.m. ET, the FTSEurofirst 300 index of leading European shares was down 1.3 percent at 1,005.12 points, although its month-to-date gain of 8.9 percent is likely to last into the close for a first monthly gain since April.
The Euro STOXX Volatility index .V2TX, which tends to move inversely to cash equities, rose 8 percent.
ITALY IN FOCUS
Looking ahead, the real test for the euro area lies with the ability of individual member states to deliver on fiscal austerity and structural reform. Italy is center stage in this context, Societe Generale economists said in a note.
Those concerns were highlighted last Friday when Italian 10-year debt yields hit a euro-era high, only to extend further on Monday, contributing to a further slide in Italian stocks, down 2.5 percent.
Against that backdrop, Cross Asset strategists at Societe Generale advised clients to go long Spain and short Italy, to play the differing political outlooks in both countries.
The broker said Spain's Popular Party is likely to win elections on November 20, which would be welcomed by markets, although they have yet to be convinced Italy will carry out the necessary economic reforms to help stem contagion fears.
Economic data out Monday gave further evidence of the need for a solid response to the crisis, with October euro zone inflation still high, unemployment rising and regional growth set to slow sharply.
JAPAN MOVE HITS MINERS
Mining stocks also contributed heavily to the market weakness after fresh Japanese currency intervention pushed the dollar higher, making metals more expensive for many buyers and weighing on demand.
As a result, the STOXX Europe 600 Basic Resources index .SXPP was down 3.2 percent by 1149 GMT, with base metals miner Vedanta Resources among the top fallers, down 6.3 percent.
Earnings news proved consistent in its inconsistency, backing up Thomson Reuters StarMine data that showed a more or less even split between beats/meets and losses so far in the quarterly reporting season.
Among the big losers on Monday was Denmark-listed Vestas Wind Systems, which slid 22 percent in volume nearly three times its 90-day daily average after it posted a profit warning on Sunday.
UK bank Barclays, down 1.1 percent, was a sector outperformer, however, after posting a rise in quarterly profit thanks to its retail banking and credit card arms and in spite of a weak investment banking environment.