European stock markets dropped early Wednesday as investors again shed bank and resource stocks on the political impasse in Greece, which triggered a run for the perceived safe-haven investments such as the U.S. dollar. The Stoxx Europe 600 index (XX:SXXP) -1.06% dropped 1.1% to 243.01, on the heels of a fresh closing low for the year reached Tuesday, of 245.76, a loss of 0.7%. Investors will be looking for news of a fresh election date for Greece on Wednesday after the nation's political parties couldn't agree on a governing coalition. That delay could deprive the country of much-needed international aid. The news has also triggered fresh worries that Greece could exit the euro zone. “We've had euro-zone contagion fears for some time now, but with the prospect of a Greek exit now looking increasingly like a reality, investors aren't risking hanging about to see what happens," said Mike McCudden, head of derivatives at Interactive Investor. “Furthermore, in recent months, global markets have been relying on the U.S. and emerging markets such as China to deliver on the global stage, but now that they are stuttering, the ongoing eurozone issues are hitting the markets harder than ever." Banks bore the brunt of selling, with shares of HSBC Holdings PLC (UK:HSBA) -1.74% HBC -0.21% off 1.3%, Danske Bank AS (DK:DANSKE) -0.79% off 1.8%, Banco Santander SA ES:SAN) -0.46% STD -3.49% down 2.6% and Deutsche Bank AG DB -2.80% (DE:DBK) +0.18% dropping 2.4%. Spanish and Portuguese stock markets were particularly hard hit, off 2.3% to 6,547.30 and 2.2% to 4,872, respectively. In Madrid, shares of recently nationalized Bankia (SAES:BKIA) -9.83% tumbled 10%. The resource-heavy FTSE 100 index (UK:UKX) -1.09% fell 1.4% to 5,359.13, led by banks, a 1.2% fall for Vodafone Group PLC (UK:VOD) -1.06% VOD -0.20% . Among other heavyweights BP PLC BP -1.75% (UK:BP) -0.71% and Royal Dutch Shell PLCRDS.A -1.39% (UK:RDSA) -0.80% fell around 1% each as the price of crude-oil futures slid on risk aversion. Mining stocks were also hit hard as gold and other precious- and base-metals futures slid. Xstrata PLC (UK:XTA) -3.59% slumped 3.5% after UBS cut the shares to neutral from buy. BHP Billiton PLC (UK:BLT) -2.44% BHP -2.51% fell 2.7%. A 1% fall for shares of Total SA (FR:FP) -1.03% drove the French CAC 40 index (FR:PX1) -0.57% 1% lower to 3,008.05. On the upside in Paris, EADS NV (FR:EAD) +1.22% rose 1.5% after lifting its 2012 forecast for earnings. Luxury-goods group LVMH Moet Hennessey Louis Vuitton (FR:MC) +1.14% rose 1.2% on the heels of a 5% jump for Compagnie Financiere Richemont SA (CH:CFR) +6.09% . Richemont said it would launch a share buyback as it reported record profit and sales for the year to March 31. In Germany, the DAX 30 index (DX:DAX) -1.00% fell 1% to 6,331.51, led by a 3% drop for steel and industrial conglomerate ThyssenKrupp AG (DE:TKA) +1.59% The data have compiled by Market Watch.
