Frankfurt: European shares declined on Tuesday, led lower by banks as traders said Abu Dhabi had sold about £3.5 billion of shares in Barclays, while investors also pointed to profit-taking after Monday’s rally.
At 0848 GMT (02:18 pm), the FTSEurofirst 300 index of top European shares was down 0.2% at 884.61 points after briefly turning positive.
On Monday, the index closed up 2.8% at 886.27 points, its highest level in nearly five months, boosted by data from the United States and China that sparked optimism regarding an economic recovery.
Barclays plunged 13.8% as traders said Abu Dhabi government-owned International Petroleum Investment Company (IPIC) sold about £3.5 billion ($5.74 billion) of shares in the British bank at 267 pence each, a 16% discount to Monday’s close.
“The ice continues to be thin, and there is a possibility that the market will continue to fall,” said Hans-Juergen Delp, equity market strategist at Commerzbank in Frankfurt.
“Basically, the mood has not changed since yesterday; no one really wants to go into the market,” he added.
Roger Peeters, strategist at Close Brothers Seydler pointed to profit taking after yesterday’s massive gains.
Banks took most points off the FTSEurofirst 300 index, and the DJ Stoxx Banks Index was the top sectoral decliner, down 1.5%.
Deutsche Bank, Societe Generale, Banco Santander and Royal Bank of Scotland all fell between 0.6 and 2.5%.
Oil and gas producers were among top losers, as crude oil dropped 1%. The DJ Stoxx Oil and Gas Index fell 0.3%.
Gamesa plunged 5.8% after Spanish power firm Iberdrola said Morgan Stanley had placed 10% in the company.
On the upside, the DJ Stoxx Cars Auto Index was the top sectoral gainer, up 3%, with BMW, Daimler, Porsche and Fiat up 0.7 to 3.6%.
Europe’s biggest home improvement retailer Kingfisher also gained 6.6% after the company delivered forecast-beating first-quarter profits.
Commerzbank’s Delp also said the market might gain momentum after key macroeconomic data in the United States later in the day, with the focus on pending homes sales for April.
The FTSEurofirst 300 index lost 45% last year as the global financial crisis hit equities worldwide, but is up 6.2% this year on hopes that the worst part of the turmoil might have passed.
Across Europe, Britain’s FTSE 100 was down 1.2%, Germany’s DAX was down 0.1% and France’s CAC was down 0.5%.