The EU: "Air, air!"

• Shares of major European companies reach 26-month lows

• The Euro, the lowest exchange rate since February 15th

Yesterday, the Euro fell on the international markets, amid worries that Greece would default.

Yesterday, the Euro fell to 1.3495 dollars - the lowest exchange rate since February 15th, but later regained ground. On the New York, at 11:18, the Euro was trading at 1.3631 dollars, 0.2% below Friday"s exchange rate. Also yesterday, the Euro fell to its lowest level since 2001 against the Japanese currency: 103.90 yen.

Shares of major European companies reached 26-month lows. Since the beginning of the year, they have fallen almost 20%, dragged down by bank stocks, due to the fears that Greece would default. Stocks of French banks were hit the hardest, as they have significant exposure to Greek debt. The STOXX Europe 600 index of the banking sector fell 3.5% in the first part of the day, making it the worst performing sector. It reached the lowest point since March 2009. Also yesterday, the major index of the German Stock Exchange - DAX - fell below 5,000 points for a while.

The pan-European FTSEurofirst 300 index fell 2.6%, and the global MSCI index lost 1.4%. Investors" pricing of banks has reached levels which haven"t been seen since the collapse of American bank "Lehman Brothers", due to escalation of the worries over the Greek default and the expansion of the sovereign debt in the Eurozone.

Bloomberg"s European banking index, which includes 46 financial companies, shows that they are trading at 0.56 book value, the lowest level since March 2009, after the "Lehman" bankruptcy. This signals that investors" valuation of banks" assets is lower than the banks" own evaluations. These evaluations reflect the impact of a potential sovereign default would have on those banks, according to analysts of "Barclays Capital", quoted by Mediafax.

The European banking index, calculated by Bloomberg, fell 4.1%, to a 30-month low, and is down 37% since the beginning of 2011. This index was negatively affected, in particular by financial companies from European peripheral countries, such as "Banco Comercial Portugues" and "National Bank of Greece", or by banks operating in such countries, such as "Commerzbank" of Germany and "Société Générale" of France. The shares of "Société Générale", "BNP Paribas" and "Credit Agricole" fell more than 10% yesterday.

Yields of long term bonds of countries in the Eurozone fell severely. The cost of insuring debts of the peripheral Eurozone countries increased, and in the case of Greece and Portugal it reached record levels.