London: European shares fell for the fourth day on Wednesday led lower by banks and commodities, while Iberdrola and Sainsbury both fell after announcing plans to raise fresh capital.
By 2:21pm, the FTSEurofirst 300 index of top European companies was down 0.9 % at 854.60 points.
Optimism about a global economic recovery has helped the FTSEurofirst 300 gain 33% since it hit a low in March this year, but the index has lost 3.46% so far this weak and analysts believe the prospect of a recovery was not enough to justify the rally.
“We had a very good run from the March lows.. the market was losing some momentum and getting ready for some form of correction,” said Bernard McAlinden, strategist at NCB Stockbrokers.
Banks took the most points off the index. BNP Paribas, UniCredit and Societe Generale were down 1.1-1.5%.
Miners Rio Tinto and BHP Billiton shed 3.6% and 2%, respectively, after officials in China said the two firms’ proposed iron-ore joint venture had a “strong monopolistic flavour”.
Fellow miners Anglo American, Antofagasta, Eurasian Natural Resources Corporation and Xstrata all slipped between 2.3% and 3.7%.
Energy firms were also lower as crude hovered around $70. BG Group, BP, Royal Dutch Shell and Tullow Oil fell 0.3-0.8%.
Across Europe, Britain’s FTSE 100 fell 0.5%, Germany’s DAX shed 0.6 percent and France’s CAC 40 was down 0.7%.
Spanish utility Iberdrola lost 4.9% after it surprised investors on Tuesday with plans to issue and sell at least £1.25 billion of shares without resorting to a right issue..
Britain’s third-biggest grocer Sainsbury fell 4.7% after it announced plans to raise €445 million to accelerate its expansion.
Defensive pharmaceutical stocks were well supported as investors looked to assets perceived as safe-bets. AstraZeneca rose 1% while Novartis and GlaxoSmithKline added 0.3% and 0.1%.
In economic news, the number of Britons claiming jobless benefit rose less than expected in May, although the rate was its highest in more than a decade, official data showed.
Meanwhile, the Bank of England’s Monetary Policy Committee voted unanimously to keep interest rates at a record low of 0.5% and maintain its £125 billion quantitative easing programme, minutes showed.
Later in the session, investors may focus on U.S May CPI figures due out at 1230 G