European Stocks Largely Flat

Banks and miners led a decline in European stocks on Wednesdays as economic worries on both sides of the Atlantic weighed on sentiment.

The Stoxx Europe 600 index ended down 1.1% at 264.10.

"There are concerns that the pickup in the economy is not that rosy and that markets have been overoptimistic after the extra liquidity provided by [the European Central Bank]. We will see stocks moving lower," said Christian Tegllund Blaabjerg, chief economist at FIH Erhvervsbank.

"Germany is doing well, but southern Europe is doing worse than expected and markets have underestimated the effects government's austerity measures will have on economies. The big questions among investors is if northern European countries will be able to support growth in Europe so much that the euro zone will come out of the negative territory," he added.

Stocks saw choppy price action throughout most of the session, but were sent sharply lower after U.S. durable-goods order disappointed expectations. Orders for long-lasting goods climbed 2.2% in February, slipping below economists' estimates of a 2.9% rise.

Near the European close, stocks on Wall Street stocks were also under pressure. The Dow Jones Industrial Average was down 79 points, or 0.6%, to 13119 and the Standard & Poor's 500-stock index was off 10 points, or 0.7%, to 1402.

Spain's IBEX 35 index underperformed Europe's national indexes, falling 2% to 7980.80, as the country's debt problems remained an issue.

Citigroup chief economist William Buiter said in a research note that the risk of a Spanish debt restructuring is higher now than it has been since the beginning of the crisis.

"Markets have underestimated the problems in Spain and what a 25% unemployment rate can do to a country's economy," he said.

Elsewhere, the FTSE 100 index fell 1% to 5808.99, the French CAC 40 index fell 1.1% to 3430.15 and Germany's DAX 30 index settled 1.1% lower at 6998.80.

In the currency markets, the euro reversed gains against the dollar as confidence faded that there would be agreement on an increase in the euro-zone's bailout funds. Late in Europe, the single currency was fetching $1.3290, down 0.5% against the dollar. The British pound was down 0.6% at $1.5848.

Among commodities, light, sweet, crude for May delivery was down $2.01 or 1.9% at $105.32 a barrel on the New York Mercantile Exchange. Most actively traded gold for April delivery on the Comex division of the New York Mercantile Exchange slipped $12.30 per ounce or 0.7% at $1672.60.

In major market action: Banks were big losers. In Madrid, Banco de Sabadell fell 3%, Bankia slid 3.6% and Banco Santander lost 1.9%. In London, Lloyds Banking Group fell 1.1% and Barclays sank 2.3%. In Paris, Société Générale lost 2.9%, Crédit Agricole slid 2.8% and BNP Paribas was off 1.3%.

Insurance stocks took a hit after Lloyd's of London, the U.K.'s 324 year old insurance and reinsurance market, posted its first loss in six years. Insurers have been hit by lower investment returns and large catastrophe claims. In London, RSA Insurance Group fell 7.56% and Prudential PLC declined 3.6%,

Resources firms were also under water as oil and metals prices inched lower. Fresnillo gave up 4.1%, Vedanta Resources shed 5.5% and Anglo American declined 3.9%. Evraz fell 5.5% after reporting a 4% decline in 2011 profit and missing analysts' expectations.

Among oil firms, BG Group gave up 1.7% and BP lost 0.7%.

Losses continued for Total, which lost 1.4% on ongoing concerns about a gas leak in the North Sea, which started Sunday.

Car makers were weak in Frankfurt. BMW lost 1.8% and Daimler fell 2.2%.

Bucking the negative trend, Infineon Technologies gained 1.8% after Exane BNP Paribas lifted the target price of the stock 30%.

Finmeccanica added 3.2% as Chief Financial Officer Alessandro Pansa identified up to €2 billion worth of assets for sale and reiterated plans to sell businesses in the transport and energy sectors.

NokiaCorp. rose 3.5% as it announced a Chinese version of its Lumia 800 smartphone would be available on the Chinese market in April.

Write to Andrea Tryphonides at andrea.tryphonides@dowjones.com