Portugal lags mixed European markets on Espirito Santo worries

miércoles 9 de julio de 2014 11:10 GYT

* Lisbon's PSI 20 sinks 1.8 pct on Espirito Santo family debt worries

* FTSEurofirst 300 down 0.1 pct, Euro STOXX 50 up 0.5 pct

* Sodexo hit after poor update (Adds details, updates)

By Francesco Canepa

LONDON, July 9 (Reuters) - Portuguese shares lagged mixed European markets on Wednesday, hit by concerns about the health of one of the country's largest financial groups.

Lisbon's PSI index fell 1.8 percent, led by a 6.5 percent fall in Espirito Santo Financial Group, the top shareholder of Portugal's largest listed bank by assets, Banco Espirito Santo (BES), itself down 3.9 percent.

The family behind BES is said to be considering debt-for-equity swaps as it grapples with financial problems at its holding companies, casting a shadow on the wider Portuguese financial sector and triggering a spike in Lisbon's sovereign bond yields.

The PSI, which has risen 24 percent in the past 12 months, has underperformed other European markets since concerns surrounding Espirito Santo arose and also after the release of some disappointing economic data last month.

"Investors are starting to wake up to this bad coffee," Franz Wenzel, chief strategist at AXA Investment Managers, said. "Also they've made fairly decent returns (on Portuguese shares) so why not taking profit and take some shelter."   Continuación...