European shares were heading for their biggest weekly fall in four months yesterday, with miners tracking weaker metals and financials coming under pressure ahead of a bank stress test report expected to show some second-tier lenders have failed. Persistent concerns about debt crises in the Eurozone and the United States prompted investors to stay away from riskier assets, with warnings from credit rating agencies of a possible US downgrade making investors nervous. The Euro STOXX 50 volatility index, one of Europe\'s main barometers of sentiment, rose 6 per cent, indicating a drop in investor desire to buy assets such as equities. The FTSEurofirst 300 index of top European shares was down 0.4 per cent at 1,084.64 at 0841 GMT, after falling 0.9 per cent in the previous session. The index was down 2.7 per cent last week, the sharpest decline since mid-March. Article continues below European insurers fell 1.2 per cent, the Thomson Reuters Peripheral Eurozone Banks index was down 0.6 per cent, while European banks dropped 0.7 per cent. Cocktail of uncertainty \"We have still got a cocktail of uncertainties for investors,\" said Keith Bowman, equity analyst at Hargreaves Lansdown. \"The situation in Europe is still very difficult to forecast. We had another warning over the US credit position and on the top of all that we have got the bank stress test results to come later today.\" The results of the stress test of 90 lenders were expected to show around ten have insufficient capital to withstand a prolonged recession. No large bank was expected to fall short and total capital needed could be under €10 billion (Dh51.8 billion). \"Transparency will be increased and the market will differentiate more between the stronger banks and the ones which are more exposed,\" said Klaus Wiener, chief economist at Generali Investments, which manages €330 billion. European technology shares also suffered a sharp selloff. The sector index fell 1.4 per cent, while Ericsson fell 1.3 per cent on news Sony Ericsson, owned 50-50 by the Swedish company and Japanese group Sony, swung to a second-quarter loss. Analysts said slow progress in US budget talks had been increasing investor anxiety. US President Barack Obama suspended negotiations for the day yesterday to give congressional leaders a chance to come up with a plan of action to unblock talks meant to cut deficits and avert a debt default. Markets were concerned Republicans and Democrats were too far apart to reach a major budget agreement by August 2, when the United States would run out of money unless the cap on government borrowing is raised. \"There is no doubt that they need to get their act together. Even a temporary default will not be advisable,\" Wiener said. \"But there is a fundamental difference between what we see in the United States and what we see in the euro area. In the US, we are talking about a debt ceiling which is self-imposed, whereas in the Eurozone, the problem in some countries is that the capital market is not willing to give them any more money.\" One-in-two chance Standard and Poor\'s said there was a one-in-two chance it would cut the United States\' AAA rating if a deal on raising the debt ceiling was not agreed soon. Moody\'s has also placed the United States on review for downgrade. Investors kept a close eye on the Eurozone debt crisis. The lower house of Italy\'s parliament was expected to give final approval to an austerity plan worth €48 billion which the country is hoping will help soothe market fears it is being sucked in. Euro STOXX 50 falls by 0.7% The Euro STOXX 50, the Eurozone\'s blue-chip index, fell 0.7 per cent to 2,676.11. The index has been underperforming other leading indexes and its latest weakness has taken it through March and June lows of 2,717. Bill McNamara, analyst at Charles Stanley, said a test of the November lows at around 2,635 looked like a realistic possibility. \"Such price action can hardly be described as bullish and the break down through the medium-term uptrend, which took place last month, has been followed by further weakness, confirming that the bull market for the index is over,\" he said.