London: European shares snapped their four-day winning streak to end lower on Friday after US jobs data disappointed and banks fell, with Societe Generale down on concerns over its derivatives operations.
The US Labor Department showed payrolls rose by 431,000 in May, well below a forecast of 513,000 in a Reuters poll.
Banks were under pressure and snapped the previous sessions gains. Societe Generale fell 7.6% with traders citing concerns about its derivatives division, but a spokeswoman at SocGen said: “If we had something to say we would have said it.”
The pan-European FTSEurofirst 300 index shares closed down 1.9% at 998.60 points, but ended the week up 0.1%.
“Today is a day of bad news and there has not been any respite from it,” said Mike Lenhoff, chief strategist at Brewin Dolphin. “It is very disappointing the jobs numbers came in below what everyone had expected.”
Markets were also spooked after the Hungarian prime minister’s spokesman supported the view that his country had only a slim chance of avoiding a Greek-style debt crisis.
Banks with exposure to eastern European countries were under pressure. Raiffeisen International and Erste Group Bank fell 8.3% and 7.8% respectively.
Most stocks of banks with a significant exposure to Eastern Europe feature among Europe’s biggest losers so far in 2010, with Societe Generale down about 35% and Raiffeisen down 21%.
They have been underperforming the STOXX Europe 600 Banks, which is down 15.3% year-to-date.
Friday’s sharp sell-off represented a market cap wipeout of about €1.9 billion ($2.32 billion) for SocGen.
BP pares gains
BP pared earlier gains and was up 0.3%. The company said it resisted political pressure to stop dividend payouts on Friday as oil continued to spill from one of its wells into the Gulf of Mexico.
However, other energy stocks fell along with crude down 3.6% after the US jobs data tempered optimism over the strength of the economic recovery.
BG Group, Royal Dutch Shell, Total and Cairn Energy were down 1% to 2.9%.
Across Europe, the FTSE 100 index was down 1.6%, Germany’s DAX was 1.9% lower and France’s CAC 40 was down 2.9%.
Spain’s IBEX fell 3.8%, Portugal’s PSI 20 lost 2.2% and Italy’s benchmark fell 3.8%.