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Banks, commodities drag European stocks lower
Wed, 8th Apr 2009 12:02
By Joanne Frearson
LONDON, April 8 (Reuters) - European shares were lower at midday on Wednesday as fears over corporate earnings knocked commodities and banking stocks, putting Europe on track for its fourth straight day of losses.
By 1033 GMT, the FTSEurofirst 300 index of top European companies was down 0.9 percent at 754.08 points. The pan-European index is still up more than 16 percent from the lifetime low it hit on March 9.
'The market is taking a reflective pause ... Obviously Alcoa was a massive disapointment and was worse than expected. We expected a first quarterly net loss of $350 million and we got $497 million,' said David Buik, partner at BGC Partners.
'This is barometer that perhaps first quarter earnings in the U.S. are not going to be good. After the fantastic run we have had it is probably folly to think we can crack on from the levels we have obtained over the last few weeks. It is a pause for reflection today.'
U.S. aluminium group Alcoa on Tuesday reported a second consecutive quarterly loss, as metal prices and the auto industry slumped and global demand fell in the economic downturn.
Miners slipped with Anglo American, Antofagasta , BHP Billiton, Eurasian Natural Resources Corporation, Rio Tinto and Xstrata down between 0.5 percent and 5 percent.
Oil producers fell after crude dropped 2.4 percent, adding to Tuesday's 3.7 percent loss on falls for equities and after weekly data showed U.S. crude inventories up far more than expected.
BG Group, BP, Royal Dutch Shell and Total were between 1 percent and 4 percent lower.
IRISH BANKS SLUMP
Banks were heavy weight losers on the index. Bank of Ireland and Allied Irish Banks fell 31.6 percent and 33.6 percent, respectively, after the government said it would create a company to take over up to 90 billion euros ($119 billion) of the sector's risky commercial property loans.
Ratings agency Moody's Investors Service also downgraded its ratings on 12 Irish banks, saying it expected more loan losses.
HSBC, Banco Santander and Deutsche Bank were between 1 percent and 2.2 percent lower.
Pernod Picard lost 6.4 percent after the French drinks group unveiled the sale of its Wild Turkey bourbon brand to Italy's Campari and said it planned a 1 billion euros rights issue to help cut debt.
On the upside, investors turned to defensive sectors like drugmakers and tobacco for safety. GlaxoSmithKline was up 1 percent, while British American Tobacco and Imperial Tobacco gained 1.3 percent and 2.4 percent, respectively.
'We are starting to see investors retreat from riskier
trades and positioning themselves within safe haven assets as we break for the Bank Holiday and delve into the U.S. earnings season,' said Joshua Raymond, market strategist at City Index.
Compass Group was 2.5 percent higher after Morgan Stanley raised its rating for the contract caterer to 'overweight' from 'equal-weight' and increased its target price to 420 pence from 360 pence.
Across Europe, the FTSE 100 index was down 1 percent, Germany's DAX slipped 0.9 percent and France's CAC 40 was 1.1 percent lower.
(Editing by Karen Foster) Keywords: MARKETS EUROPE STOCKS
(joanne.frearson@thomsonreuters.com; +44 207 542 2773, Reuters Messaging:joanne.frearson.thomsonreuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
LONDON, April 8 (Reuters) - European shares were lower at midday on Wednesday as fears over corporate earnings knocked commodities and banking stocks, putting Europe on track for its fourth straight day of losses.
By 1033 GMT, the FTSEurofirst 300 index of top European companies was down 0.9 percent at 754.08 points. The pan-European index is still up more than 16 percent from the lifetime low it hit on March 9.
'The market is taking a reflective pause ... Obviously Alcoa was a massive disapointment and was worse than expected. We expected a first quarterly net loss of $350 million and we got $497 million,' said David Buik, partner at BGC Partners.
'This is barometer that perhaps first quarter earnings in the U.S. are not going to be good. After the fantastic run we have had it is probably folly to think we can crack on from the levels we have obtained over the last few weeks. It is a pause for reflection today.'
U.S. aluminium group Alcoa on Tuesday reported a second consecutive quarterly loss, as metal prices and the auto industry slumped and global demand fell in the economic downturn.
Miners slipped with Anglo American, Antofagasta , BHP Billiton, Eurasian Natural Resources Corporation, Rio Tinto and Xstrata down between 0.5 percent and 5 percent.
Oil producers fell after crude dropped 2.4 percent, adding to Tuesday's 3.7 percent loss on falls for equities and after weekly data showed U.S. crude inventories up far more than expected.
BG Group, BP, Royal Dutch Shell and Total were between 1 percent and 4 percent lower.
IRISH BANKS SLUMP
Banks were heavy weight losers on the index. Bank of Ireland and Allied Irish Banks fell 31.6 percent and 33.6 percent, respectively, after the government said it would create a company to take over up to 90 billion euros ($119 billion) of the sector's risky commercial property loans.
Ratings agency Moody's Investors Service also downgraded its ratings on 12 Irish banks, saying it expected more loan losses.
HSBC, Banco Santander and Deutsche Bank were between 1 percent and 2.2 percent lower.
Pernod Picard lost 6.4 percent after the French drinks group unveiled the sale of its Wild Turkey bourbon brand to Italy's Campari and said it planned a 1 billion euros rights issue to help cut debt.
On the upside, investors turned to defensive sectors like drugmakers and tobacco for safety. GlaxoSmithKline was up 1 percent, while British American Tobacco and Imperial Tobacco gained 1.3 percent and 2.4 percent, respectively.
'We are starting to see investors retreat from riskier
Compass Group was 2.5 percent higher after Morgan Stanley raised its rating for the contract caterer to 'overweight' from 'equal-weight' and increased its target price to 420 pence from 360 pence.
Across Europe, the FTSE 100 index was down 1 percent, Germany's DAX slipped 0.9 percent and France's CAC 40 was 1.1 percent lower.
(Editing by Karen Foster) Keywords: MARKETS EUROPE STOCKS
(joanne.frearson@thomsonreuters.com; +44 207 542 2773, Reuters Messaging:joanne.frearson.thomsonreuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
