Portuguese stocks slump on banking woes, European shares slip
* Portugal's PSI share index falls 4.2 percent
* FTSEurofirst 300 index closes 1 pct lower
* European banking index among top fallers
By Atul Prakash
LONDON, July 10 (Reuters) - Investors across Europe trimmed their exposure to banks on Thursday in response to growing concerns about the health of Portugal's biggest listed lender, with a leading pan-European share index slipping to a two-month low.
Portugal's PSI share index fell 4.2 percent to a nine-month low, lagging all other European benchmarks, after shares and bonds of Espirito Santo Financial Group, the chief shareholder in Banco Espirito Santo, were suspended over "material difficulties" at its parent firm ESI.
Trading in Banco Espirito Santo was also later halted after a 19 percent drop, making investors nervous across Europe. The FTSEurofirst 300 index of top European shares closed 1 percent lower at 1,349.89 points after falling as low as 1,342.68, the lowest since early May.
Financial stocks bore the brunt of the sell-off, with the STOXX Europe 600 Banking Index falling 1.7 percent to its lowest level since the middle of December.
"The BES situation is a tangled story of cross holdings and unexplained debts which has highlighted the risks that still exist in some European banks," said Lorne Baring, managing director of B Capital Wealth Management. Continuación...