European stock markets fell on Thursday in reaction to escalating debt crisis of the region. Italy and Spain have again taken a major hit as the yield on Spanish bonds increased substantially. There was also rumor in the market that the Spanish Government may seek loans from the International Monetary Fund and European Union’s Rescue fund. Moreover, Spanish economy minister also disclosed that the country have to set aside almost 50 billion euros equivalent to $65 billion which as extra provisions on bad assets. The amount is almost 4 percent of Spain’s GDP.

Spanish Stock Exchange’s IBEX 35 index declined 2.9 percent to 8,329.60 for the day. Among the bears included Banco Santander SA which fell 4.5 percent while BBVA SA slipped 5 percent for the day.

The European Stoxx 600 index fell 0.9 percent to close at 247.39 for the day. Banking stocks took the major beating as Italy’s UniCredit SpA plunged 17.3 percent. Italy’s FTSE MIB Index also fell 3.7 percent to 14,767.22 with UniCredit as the highest decliner. Among other falls Intesa Sanpaolo SpA fell 7.3 percent while Banco Popolare declined 10.3 percent for the day.

Germany’s DAX 30 index corrected by 0.3 percent to 6,095.99 with Deutsche Bank as the biggest fall and dropped 5.6 percent while Commerzbank AG declined 4.5 percent. French CAC-40 index plummeted 1.5 percent to 3,144.91 with Societe Generale SA posting the fall of 5.4 percent.

London’s FTSE 100 index also fell 0.8 percent to 5,624.64 for the day. Banking sector also remained bearish in London Stock Exchange however Petrofac Ltd and Eurasian Natural Resources Corp gained 1.9 percent and 4.6 percent respectively.