European stocks fell on Friday after the Italian government agreed a higher-than-expected fiscal deficit target, which could clash with the European Union.
Italian bank stocks were hit hard, plunging 7.3%, as the country's bonds were sold, and the market focused on whether credit rating agencies would take action.
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The Italian stock index. FTMIB and bank stocks both registered their biggest one-day decline since the June 2016 British referendum triggered a general market downturn.
Pan European STOXX 600 index fell 0.8%, euro zone index.STOXX50E fell 1.3%.
Today was the last trading day of the third quarter, with the pan-European STOXX 600 gaining slightly in the third quarter, reflecting only a 1% rise in the market's volatile third quarter.
Italy FTSE MIB index.FTMIB fell 3.7%, German stock DAX index.GDAXI down 1.4%.
"Italy's fiscal deficit target data is higher than expected, certainly not a good omen. Now all the attention will turn to rating agencies, which are waiting for budget data to reassess their ratings of Italy. AXA IM portfolio manager Gilles Guibout said.
The Italian government on Thursday set a budget deficit target of 2.4% of gross domestic product for the next three years, ignoring EU demands and demonstrating that the nonpartisan Italian Minister of Economy and Finance, Giovanni Tria, is no match for Party leaders.

<>European stock markets tumbled and Italy's stock market and stock market hit har

 

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