London---Europe's equities sank Friday on disappointment over the reported size of potential bond purchases from the European Central Bank, while Madrid was rocked by giant bank Santander's massive capital hike.
Most European markets gave up at least half of the gains from the day before.
London's FTSE 100 shed 1.05 percent to close at 6,501.14 points, while Frankfurt's DAX 30 lost 1.92 percent to 9,648.50 points and the CAC 40 in Paris dropped 1.90 percent to 4,178.07.
Madrid's IBEX 35 felt the heaviest losses plunging 3.91 percent to 9,719 points, with shares in Spanish banking titan Santander collapsing on shock news of a 7.5-billion-euro ($8.8-billion) capital raising.
The second heaviest losses were witnessed in Milan, where the FTSE MIB index fell 3.27 percent to 18,177 points after shares in troubled bank Monte dei Paschi di Siena plunged more than eight percent after having soared the day before on takeover speculation.
The euro recovered to $1.1835 in London, after tumbling Thursday to $1.1754 -- last seen in December 2005 -- on ECB stimulus speculation.
ECB staff have presented its governing council with various models for a new asset purchase programme to ward off deflation in the euro area, Bloomberg news agency reported.
However, governors took no decision on the design or implementation of any package after the presentation, Bloomberg said, quoting sources who attended the meeting.
"European markets came off the boil on Friday led lower by shares in Banco Santander," said Jasper Lawler, market analyst at CMC Markets.
"This came as an ECB staff proposal for a QE programme to buy as much as 500 billion euros of investment grade assets fell short of market expectations which extend into the trillions of euros."
ECB chief Mario Draghi said recently that the governing council asked its staff to draw up possible scenarios for the launch of a policy of so-called quantitative easing (QE) -- or the large-scale purchase of sovereign bonds -- to prevent the eurozone from sliding into a deflationary spiral of falling prices.
- Santander stock tumbles -
Back in Madrid, investors were still shell-shocked by the surprise news from Santander, which is the eurozone's largest bank by market value.
Banco Santander's share price nosedived 14.09 percent to close at 5.89 euros on Friday after it unveiled plans the day before to raise the fresh funds.
The shares sale will amount to about 10 percent of the current market value of the lender.
In New York Wall Street stocks traded lower at midday Friday after a mixed jobs report.
The Dow Jones Industrial Average shed 0.67 percent to 17,787.75, while the broad-based S&P 500 slid 0.55 percent to 2,050.70 and the tech-rich Nasdaq Composite Index reversed 0.42 percent to 4,716.18.
While the US economy added a solid 252,000 jobs in December and the unemployment rate dropped to 5.6 percent, hourly wages fell and the labour participation rate dropped.
That mixed data is unlikely to shake the US Federal Reserve from its current course of raising interest rates later this year although 2014 turned out to be the best year for job generation in the United States in 15 years.
AFP
