European markets fall on Middle East, US fiscal cliff news

Markets dropped across Europe on Friday, paced by Milan's FTSE MIB index, amid concern over US economic growth and as fighting continued to escalate in the Middle East. Newly re-elected U.S. President Barack Obama discussed planned US tax hikes for the world's largest economy in congress. The country's so-called "fiscal cliff" measures, or the cuts in spending and tax hikes planned by Obama, are slated to take place by the end of the year. The International Monetary Fund on Thursday signalled the measures could have global consequences. Stocks were also hurt by the outbreak of fighting between Israel and Hamas which escalated during the course of Friday. For the first time from Gaza, Hamas fired rockets at Israel, while the latter in turn continued bombing the Gaza Strip. Protestors across the Middle East staged demonstrations to denounce the Israeli attacks. Italy's Ftse Mib index fell 2% to under 15,000 points. The yield spread between 10-year Italian bonds and the German benchmark, a barometer of Italy's borrowing costs in the eurozone crisis, closed at 354 points with 10-year yields at 4.9%. The Frankfurt Dax bourse dropped 1.3% to 6,950, while the Paris Cac 40 Index fell 1.2% to 3,341 points. Madrid's Ibex index dropped 1.4% to 7,588 points. London's Ftse-100 stock market declined 1.3% to 5,606 points.