London: European shares fell in early trade on Friday as investors took a breather after pushing equities up 10% over the past three days and looked to US jobs data for signs of any recovery in the economy.
At 1:17pm, the FTSEurofirst 300 index of top European shares was down 0.9% at 774.20 points, led lower by falls in bank stocks.
The benchmark rose 4.9% on Thursday after world leaders clinched a $1.1 trillion deal to combat the worst economic crisis since the Great Depression and said financial rules would be tightened to stop it happening again.
UBS, Societe Generale, Credit Suisse and HSBC were down 1.9-4.5%.
“We increased our equities exposure on Monday, before the G-20, going slightly less underweight as we believe we should have better newsflow regarding the US economy in the next months,” said Thierry Lacraz, strategist at Pictet.
“The (US) unemployment numbers will unfortunately be relatively bad and from the point of view of psychology not good at all for stocks but it is a lagging indicator,” he said, adding that he was looking at factors like purchasing managers´ indexes (PMI) and industrial orders.
Analysts expect US non-farm payrolls to tumble by 650,000 for March after a similar loss in February. The report is due today.
Danish drugmaker Novo Nordisk was the worst loser in Europe, sliding 10% after a US advisory panel failed to back its experimental diabetes drug Victoza, with votes split on whether it was safe enough to come to market due to worries over cancer.
Across Europe, Britain’s FTSE 100 was down 0.7% while Germany’s DAX and France’s CAC lost 0.9%.
Auto shares added to gains from the previous session as Credit Suisse upgraded the sector to “overweight” from “market weight”.
Daimler gained 4.9%, BMW rose 2.4%, and Renault jumped 6%. The DJ STOXX European autos sector index was the only gainer among the STOXX sectoral benchmarks, up 1.5%.
The FTSEurofirst is on track for its fourth successive week of gains, the longest winning streak since October 2007.
The index is now up 20% since 9 March, when it hit the lowest point in its 12-year lifetime.
The mini-rally, in the midst of a bear market, has been supported by reassuring updates from banks at the centre of the credit crisis, some positive macroeconomic data and policy action.
But Lacraz said there was plenty of reason for caution.
“We’re still very dubious about what could happen to the global economy in 2010 but it’s too early to worry about 2010 and people are looking at the market over the next three months,” he said.
“The current enthusiasm will be tested in the next few days with first-quarter (corporate) results coming out, as well as the prospect of further bailouts of troubled companies and a bankruptcy for GM,” said Romain Boscher, head of equity management at Groupama AM, while Lacraz said he expected positive surprises from the financial sector results and some disappointments elsewhere.