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Europe stocks down; banks fall, drugmakers gain

Europe stocks down; banks fall, drugmakers gain
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First Published: Tue, Jul 28 2009. 04 17 PM IST
Updated: Tue, Jul 28 2009. 04 17 PM IST
London: European shares were lower around midday on Tuesday in choppy trade with falls in banking and energy stocks overshadowing gains in drugmakers.
By 4:14pm, the pan-European FTSEurofirst 300 index was down 0.1% at 910.72 points, having been up as much as 918.45 points earlier.
The index on Monday hit its highest close since 10 November and has gained about 41% since reaching a lifetime low of 645.50 points in early March.
“We are seeing a bit of profit taking, which is not too surprising after the run we have had in the past two-weeks,” said Philippe Gijsels, strategist at Fortis Bank.
“Going forward I think people should remain cautious ... as everything we have seen in the past two weeks have been based on hopes of a recovery in the second half and that earnings will grow ... but I think the market maybe disappointed,” he said.
Banks took the most points off the index. Deutsche Bank was down 8.4% after it raised its loan loss provisions in the second quarter, overshadowing a nearly 70 percent rise in net profit driven by its investment bank.
BNP Paribas, UniCredit and UBS were down 0.7-2.4%.
Energy stocks were in the doldrums. Oil giant BP fell 1.5% after it said it had increased its cost reduction targets for 2009 by 50% to $3 billion, as it reported a halving in second quarter profits due to lower oil prices and weaker refining. Premier Oil, Dana Petroleum and Total were down 0.6 to 1.2%.
Miners were lower, with Xstrata down 4.4% despite posting solid first-half production numbers.
Charles Kernot at Evolution Securities who said the production figures were positive, still reiterated a “reduce” rating after the shares surged 35% during the two weeks up to Monday.
Anglo American, Antofagasta, BHP Billiton, Eurasian Natural Resources Corporation and Rio Tinto were down 0.9 to 3%.
Dutch supermarket group Ahold slipped 4.1% after it said it had missed forecasts as the economic slump drove shoppers to cut their spending on food. “There is this sentiment in the market about the glass being half full - but there is a big gap between the euphoria and reality, a bit like a supermodel without makeup,” said Commerzbank Chief Strategist Hans-Juergen Delp.
“Earnings expectations have been lowered so much that they are easily exceeded,” he added.
In individual stock movers, Lagardere soared 11% after it said it has been cleared in the EADS insider trading investigation.
Drugmakers were also in demand as investors turned to the safety of defensive stocks.
Sanofi-Aventis was 2.5% higher after Morgan Stanley upgraded the stock to “overweight” from “equal weight.”
Across Europe, the FTSE 100 index was down 0.4%, Germany’s DAX was 0.1% lower and France’s CAC 40 was down 0.1%.
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First Published: Tue, Jul 28 2009. 04 17 PM IST
More Topics: Markets | Europe | Stocks | Asia | Drugmakers |