Markets Are In The Red, Major Portugese Bank Crashes

Britain's FTSE is down 0.2%.

France's CAC 40 is down 0.7%.

Germany's DAX is down 1.0%.

Spain's IBEX is down 1.6%.

This comes in the wake of new inflation and unemployment data.

Consumer prices in the euro zone climbed by just 0.4% year-over-year in July, the lowest rate in five years.

Meanwhile, the unemployment rate in the region slipped to 11.5% in June from 11.6%.

"Lowflation in the euro area suggests the European Central Bank will maintain its easing bias," said Bloomberg economists David Powell and Niraj Shah. "Those weak price pressures are likely to endure as the unemployment rate remains elevated."

In Portugal, beleagured Banco Espirito Santo immediately lost half of its market value after shares resumed trading in the wake of a horrific earnings announcment.

"Banco Espirito Santo SA's stock plunged by the most on record and the bonds slumped after it was ordered to raise capital following a 3.6 billion-euro ($4.8 billion) first-half net loss," reported Bloomberg's Joao Lima. "The Bank of Portugal required the lender to raise the money after it set aside 4.25 billion euros in the first half, mostly to cover souring loans to other members of the Espirito Santo Group. That cut Banco Espirito Santo's common equity Tier 1 ratio to 5 percent, less than the 7 percent regulatory minimum, according to a statement yesterday."

This is weighing on the Portugese stock market where the PSI20 is down 3.2%.