Korea Debt Concern

European stock markets fell amid growing concerns about the sovereign-debt crisis steps by China to cool inflation and the escalating tensions between North and South Korea.

Banco Santander SA slumped by 3.3 percent pace a sellout in the Spanish lender. Rio Tinto Group fell by 2.2 percent, to reduce what basic resource stocks. Actelion Ltd. lost 1.1 percent as UBS AG, the Swiss pharmaceutical company downgraded shares. Givaudan SA, Luxottica Group SpA and Puma AG slipped each with more than 1 percent of Morgan Stanley recommends that investors reduce their holdings of the three stocks.

The benchmark Stoxx Europe 600 index fell 0.3 percent to 267.05 at 3:22 clock in London after earlier sinking as much as 1.3 percent. The meter is for a third week as investors speculated declines position that the region does not contain its sovereign debt crisis.

"There is a combination of negative news, the stress on the market today," said Christian Falkner, an analyst at Alpha said trading in Frankfurt. "On the one hand, statements of Kim Jong Il on the likelihood of war in Korea and on the other speculation that asked Portugal that you can tap the European Stability Fund. Investors are also worried about inflation in China. Financial stocks are especially hurt today. "

VSTOXX rallies

VSTOXX Index, which measures the cost of protecting against a decline in the shares to the Euro Stoxx 50 index rose by 9.1 percent to 27.73. The meter is headed for a 26 percent increase this week, the biggest gain since May.

The MSCI Asia Pacific Index moved 1.2 percent, as North Korea warned that South Korean military exercises with the U.S., the Peninsula, take the "brink of war," said state news agency KCNA. North Korea threatens a "shower of terrifying fire" if the U.S. and South Korea against its sovereignty.

Chinese stocks fell for the first time in three days, led by banks and developers to Shanghai Securities News said the government may cut the target for new loans next year.

Chinese officials have taken measures in recent weeks strengthened to curb inflation that reached 4.4 percent last month, the fastest pace in two years. Analysts at nine banks surveyed by Bloomberg News last week predicted the central bank will increase borrowing costs for a second time until the end of the year.

Portugal, Spain

Portuguese Finance Minister Fernando Teixeira dos Santos said governments of the European Union can not with a rescue package of his country even as speculation mounts that need to Portugal, finally, ask for one.

Nouriel Roubini, the New York University professor who predicted the global financial crisis provides a 35 percent chance that Greece will leave the euro, increasing the probability over the next five years in Austria Format magazine reported, citing an interview.

Shares compared with some of their declines as Irish officials went to a completed deal for an international aid package before financial markets open again next week with talks centering on the status of the Noteholders of the largest banks in Ireland.

Euro-area finance ministers plan to reach an agreement on 28 make ready for November, an EU official said on condition of anonymity. Bank of Ireland Plc, Ireland's largest bank, reversed earlier losses, rising 4.7 percent to 26.8 cents.

National benchmark indexes fell in 15 of the 18 western European markets. The British FTSE 100 index and the DAX index in Germany lost 0.4 percent, while France's CAC 40 moved 0.9 percent. Spain IBEX 35 fell by 1.6 percent.

Banks decline

A gauge of bank stocks was up 1.6 percent, the worst performance among 19 industry groups in the Stoxx 600 Santander, Spain's biggest lender, fell 3.3 percent to 7.57 euros. Banco Bilbao Vizcaya Argentaria SA lost 2.5 percent to € 7.55. BNP Paribas SA, France's largest bank, slid 3.5 percent to 48.08 €, extending the longest streak in falling almost two months.

Royal Bank of Scotland Group Plc fell 3.9 percent to 39.27 pence, the biggest decline in the Stoxx 600th Lloyds Banking Group Plc, Britain's largest mortgage lender, fell by 3.8 percent to 62.24 pence. John Vickers, chairman of the Independent Commission on Banking Supervision, said the Lloyds TSB "seems to have been a mistake," HBOS merger with Sky News reported on its website.

Metals decline

Rio Tinto Group lost 2.2 percent to 4,175.5 pence as the world's third-largest mining group said the planned expansion of its iron ore in Western Australia may cost more than $ 14,700,000,000. A measure of basic-resource company was among the worst performers in the Stoxx 600 fell 1.6 percent. BHP Billiton Ltd., the world's largest mining companies moved, by 1.4 percent to 2,319 pence as base metal fell in London.

Vedanta Resources Plc fell 2.6 percent to 2087 pence. Standard & Poor's may lower its credit rating on the mining company of billionaire Anil Agarwal to be controlled if the proposed acquisition is approved by a majority stake in Cairn India Limited.

Actelion, the pharmaceutical company that will attract a takeover bid by Amgen Inc. may lost 1.1 percent to 54.35 Swiss francs as UBS cut its recommendation on the shares to "Neutral" from "buy." The stock has since 38 percent of 30th September rose.

Puma, the sporting goods company PPR SA, controlled by the manufacturer, fell by 2.8 percent to € 230.60. Givaudan, the world's largest manufacturer of flavors and fragrances, fell by 1.3 percent to 1,020 francs. Luxottica, the owner of Ray-Ban and Oakley sunglasses, slipped 1.2 percent to € 20.68. The three stocks were downgraded to "underweight" at Morgan Stanley.

Inditex, Kingfisher

Inditex, the owner of the Zara and Massimo Dutti chains slumped 2.5 percent to € 58.40 as Merrill Lynch Global Research BofA shares graduated to "Neutral" from "buy."

Kingfisher, Europe's largest retail home improvement, fell by 2.2 percent to 244.1 pence after being cut to "underperform" from "neutral" by the agency.

Technip SA, Europe's second largest oil field services provider, slipped 1.1 percent to € 62.14. The stock was cut to "equal weight" from "overweight" at Morgan Stanley.

Porsche SE lost 2.4 percent to € 57.88 after the automaker climbed for seven consecutive days by 27 percent.

Sky Germany AG gained 10 percent to 1.67 euros Morgan Stanley raised its recommendation on the stock to "overweight".

BT Group plc jumped 4.9 percent to 175 pence after Exane BNP Paribas raised its price estimate for the UK's largest fixed-line phone company by 20 percent to 265 pence. Analysts also raised their profit forecasts for the company for a "strong first half performance," according to a report to clients.

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