European stock markets slump, though RBS shares rise

European stock markets fell on Wednesday but shares in the Royal Bank of Scotland rose even though the bank said that it faced big fines over the Libor rate-rigging crisis.

In foreign exchange deals, the European single currency slid to $1.3506 from $1.3582 late on Tuesday in New York.

London's FTSE 100 index of top companies was off by a slight 0.10 percent to 6,276.17 points in afternoon deals.

Frankfurt's DAX dropped 1.36 percent to 7,560.18 points and in Paris the CAC shed 1.52 percent to 3,638.38.

Madrid's IBEX 35 slipped 0.74 percent lower in value and Milan's FTSEMIB index lost 1.24 percent.

"Investors are not inclined to take chances and are shunning risky stocks because they are asking themselves questions about the situation in the eurozone," said Saxo Banque analyst Andrea Tueni.

US stocks were also retreating, with the Dow Jones Industrial Average down by 0.44 percent, the S&P 500 index dropping 0.39 percent and the tech-rich Nasdaq Composite off by 0.33 percent.

Gold prices dipped to $1,670 an ounce from $1,673.50 on the London Bullion Market on Tuesday.

Shares in Royal Bank of Scotland rose 0.36 percent to 338.70 pence however after the lender said it had agreed to pay $612 million (453 million euros) to US and British regulators to settle allegations of trying to rig the key Libor interest rate.

That was more than Libor-related fines handed out to British bank Barclays last year but far less than the $1.5 billion fine slapped on Swiss lender UBS.

Angus Campbell, head of market analysis at Capital Spreads trading group, said the fines were "towards the low end of expectations, so initial response from the market is positive."

Libor, or London Interbank Offered Rate, is a flagship instrument used all over the world, affecting what banks, businesses and individuals pay to borrow money.

Among industrial stocks, shares in ArcelorMittal gained 0.97 percent to 12.55 euros in Paris deals after the world's top steel producer posted mixed earnings news.

The company stumbled into the red last year with a net loss of $3.72 billion (2.75 billion euros) largely owing to costs related to Europe's economic strains, said ArcelorMittal, adding that it envisaged a rebound this year.

Asian stock markets mostly closed higher on Wednesday following big losses in the previous session, with Tokyo surging as the yen tumbled after Bank of Japan governor Masaaki Shirakawa said he would step down early.

Tokyo soared 3.37 percent to 11,463.75 points -- the highest close since September 2008 soon after the collapse of US bank Lehman Brothers and at the height of the global financial crisis.

Japanese foreign exchange traders welcomed Shirakawa's announcement that he would step down on March 19, about three weeks before the end of his term.

It fuelled expectations that Prime Minister Shinzo Abe would likely fill the post with someone who shares his ideas on aggressive monetary easing that would see more yen pumped into the economy.

burs-wai/arp