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European shares slip from 28-month high; banks fall

European shares slip from 28-month high; banks fall
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First Published: Wed, Jan 19 2011. 05 02 PM IST
Updated: Wed, Jan 19 2011. 05 02 PM IST
London: European shares slipped from a 28-month high on Wednesday, with truckmakers lower on an anti-trust probe and with banks falling back after a recent strong run.
At 3:38pm, the FTSEurofirst 300 index of top European shares was down 0.3% at 1,164.04 points, after rising 0.9% in the previous session to its highest close since September 2008.
The European benchmark is up 80 percent from its lifetime low of March 2009, with several major economies having emerged from recession helped by stimulus from governments and central banks worldwide. European Union authorities launched cartel raids on truck manufacturers in Europe, including the industry’s top two firms, Daimler and Volvo, which fell 1.3% and 1% respectively. Scania, also under investigation, fell 2.1%.
However, most analysts remained upbeat, citing strong fundamental drivers, such as earnings from the likes of US technology company Apple. “Earnings look good, with strong margins,” said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.
“Macro(economic) stuff has been good, with a strong German ZEW. Monetary policy remains accommodative, but we may now be moving towards higher interest rates.”
The banking sector slipped, having had a strong run in recent days, on optimism for measures to address the eruo zone peripheral debt crisis.
Banco Santander and Intesa SanPaolo fell 0.6% and 0.5% respectively.
Across Europe, Britain’s FTSE 100 fell 0.1%, Germany’s DAX was up 0.1% and France’s CAC40 fell 0.2%.
RETAILERS FALL
European retailers were among the biggest losers, with downbeat news hitting smaller British companies.
Kesa fell 5.6% after Europe’s third-biggest electricals retailer said full-year profit would be at the lower end of expectations due to bad weather and weaker sales in Britain following a sales tax rise.
HMV fell 9.5% after saying credit insurers had reduced the cover they were prepared to give its suppliers, adding to worries about the long-term future of the British music and books retailer.
Some analysts said upbeat earnings news may already be priced in. “The rally from earnings season may have run its course. There is a danger a consolidation may turn into a correction,” City Index market strategist Joshua Raymond said.
On the upside, William Hill rose 7.8% after Britain’s biggest bookmaker said its full-year operating profit will be at the top end of market expectations.
In ecomomics, the number of Britons claiming unemployment benefit fell unexpectedly last month, while the number of people out of work rose in the three months to November.
Later, investor attention will turn to US economic data, such as housing starts and earnings from companies including Goldman Sachs, Bank of New York Mellon and State Street.
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First Published: Wed, Jan 19 2011. 05 02 PM IST
More Topics: Markets | Europe | Stocks | Financials | Goldman Sachs |