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European markets slump as soaring euro takes toll

German DAX 30 and French CAC 40 slide into heavy losses sparked by euro rally, weighing on FTSE 100.

European markets slump as soaring euro takes toll

Update: European markets have suffered heavy losses, as the euro's continued rally took its toll on the continent's exporters.

After opening broadly flat, both the German DAX 30 and French CAC 40 slipped steadily further into the red as the day wore on, down 1.7% and 1.6% respectively.

That bearishness weighed on the FTSE 100, which reversed earlier gains to close 35 points, or 0.5%, lower at 7,452.

The euro continued to make gains after yesterday's strong rally, up 0.2% against both the pound and the dollar.

Despite a dovish message yesterday from European Central Bank president Mario Draghi, the prospect of the central bank 'tapering' its bond-buying quantitative easing programme has unnerved investors.

'The fear the ECB will discuss the possibility of trimming its bond buying scheme later this year has driven investors to dump their eurozone equities,' said David Madden, market analyst at CMC Markets UK.

'Stock markets in continental Europe have been flooded with money... because of the extremely aggressive monetary policy of the European Central Bank, and now the cash is making its way out of the region, and dragging the London market lower with it.'

(10:34) Vodafone rallies on European turnaround

Vodafone (VOD) has led the FTSE 100 higher after strong first quarter results powered by a strong showing in Europe.

Shares in the business added 2.1% to 228.5p, on news first quarter revenues rose 2.2% to €10.3 billion (£9.2 billion). That helped the FTSE 100 rise 27 points, or 0.4%, to 7,515.

Helal Miah, analyst at The Share Centre, said the results were 'encouraging'. 'The key issue for most investors is that after many years, Europe is showing a sustained turnaround. Italy, Spain and Germany showed good momentum and UK businesses showed some signs of recovery.'

A price war in India continued to take its toll, with revenues in the country down 13.9% year-on-year, but stabilising from the previous quarter, having been responsible for the bulk of the group's €6.1 billion annual loss last year.

'A few years ago, India was seen as the engine of growth, while the European business struggled. Fast forward to the present day, and things look very different,' said George Salmon, equity analyst at Hargreaves Lansdown.

Outside the FTSE 100, online payments group Paysafe (PAYS) was a big riser, up 7.6% to 583p and jumping to the top of the FTSE 250 after a takeover approach from private equity groups Blackstone and CVC Partners at 590p per share. Fund group Old Mutual, Paysafe's biggest investor, has supported the bid.

Paysafe also announced the $470 million (£361 million) acquisition of US payments processor Delta Card Services.

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