London: European stocks closed lower on Monday as investors opted to take profits on recent gains after another series of bad US bank results highlighted damage caused by the US subprime home loan crisis.
Dealers said record high oil prices added fresh concerns over inflation.
Meanwhile, a 50 billion pound Bank of England plan to get British banks lending again proved welcome on the view that the authorities had finally taken concrete action. This helped London stocks close off their lows.
It also highlighted just how serious the fallout from the US subprime home loan crisis has become, with British bank-lending drying up fast for new mortgages.
News that Bank of America’s first quarter earnings had been savaged added to the overall negative tone, which contrasted sharply with Asia where investors chased stocks in the belief that the worst of the crisis was over.
Asian stock markets posted robust gains on Monday as investors there read last week’s first quarter US results, especially from Citigroup, in a positive light, convinced that much of the subprime losses were now out in the open.
Accordingly, Tokyo closed up 1.63%, Hong Kong added 2.17% and Sydney put on 3.1%.
Dealers said there was room for some profit taking given recent gains and the bad news may only provided the appropriate lead, leaving underlying sentiment still more positive.
In London, the FTSE 100 index of leading shares was little changed, slipping just 0.06 % to 6,053.00 points, but in Frankfurt the Dax 30 shed 0.83% to 6,786.55 points and in Paris the CAC 40 lost 1.03% at 4,910.35 points
The Euro Stoxx 50 index of leading European shares was down 1.02% at 3,769.89 points.
The European single currency stood at 1.5885 dollars, up from 1.5871 dollars earlier in the day and 1.5814 dollars in New York on Friday.