Portuguese shares, hit by Espirito Santo concerns, underperform in Europe

miércoles 9 de julio de 2014 12:43 GYT

* Lisbon's PSI 20 sinks 2.1 pct on Espirito Santo family debt worries

* FTSEurofirst 300 flat, Euro STOXX 50 up 0.6 pct

* Sodexo hit after poor update (Updates prices at settle)

By Francesco Canepa

LONDON, July 9 (Reuters) - Portuguese shares fell on Wednesday, underperforming other European equity markets as they were hit by concerns about the health of one of the country's largest financial groups.

Pan-European indexes were broadly flat to slightly higher.

Lisbon's PSI index dropped 2.1 percent, led by an 11 percent plunge in Espirito Santo Financial Group. It is the top shareholder in Portugal's largest listed bank by assets, Banco Espirito Santo (BES), whose shares dropped 4.7 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 last month and also after the release of some disappointing economic data last month.   Continuación...