London: European shares fell on Wednesday for a third consecutive session as investors awaited congressional testimony by US Federal Reserve chairman Ben Bernanke, with banking stocks bearing the brunt of the falls.
By 2:12pm, the pan-European FTSEurofirst 300 index of top shares was down 0.3% at 1,008.80 points. The index, which gained around 26 percent in 2009, is down 3.6% this year.
Banks featured among the worst performers. Banco Santander, BBVA, UniCredit and Barclays lost 1.7 to 3.8%.
“As far as Europe’s events today, it will be absolutely dominated by the prevailing attitude of Bernanke. Markets will take note of it and I think what Bernanke says today will govern the direction of markets for the next 5 weeks at least,” said Howard Wheeldon, strategist at BGC Partners.
Bernanke will have to answer why he decided to spring a surprise on financial markets last week by raising the interest rate the Fed charges on emergency loans to banks -- and whether that signals the days of easy money are over.
Miners were out of favour after state media reported that China’s banking regulator’s had told commercial lenders to restrict new loans to local governments’ financing arms to ward off potential risks of default.
Anglo American, Antofagasta, BHP Billiton, Eurasian Natural Resources Corporation, Rio Tinto and Xstrata slipped 0.7 to 1.6%.
Across Europe, the FTSE 100 index fell 0.01%, Germany’s DAX lost 0.2% and France’s CAC 40 dipped 0.2%.
Dutch chemicals group DSM dropped 6.3% after it posted an unexpected fourth-quarter net loss and did not give an outlook for 2010.
On the upside, investors stuck with the safety of defensive stocks.
Healthcare service providers were in demand. Fresenius Medical Care rose 4.2% after it reported fourth-quarter earnings above market expectations.
Its parent company Fresenius gained 2.9% after it posted full-year operating earnings growth of 19% and raised the prospects of further gains in 2010.
Drugmakers were on the upside. Swiss drugmaker Roche Holding was 0.3% higher after its blockbuster cancer drug Xeloda received a European Union recommendation for a treatment of early colon cancer. French hotel and services group Accor ticked up 4.3% after it laid out its plan to split later this year, with hotels taking on the bulk of group debt while it will sell non-strategic assets such as a casino stake.
In economic news, Germany’s economic recovery stalled in the fourth quarter of 2009, as weak private consumption and investment offset a jump in exports, leaving Europe’s largest economy on a weak footing going into 2010.
Later in the session, investors will eye US new home sales due out at 8:30pm.