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Banks, commodities drag European stocks down

Banks, commodities drag European stocks down
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First Published: Wed, Jun 03 2009. 03 20 PM IST
Updated: Wed, Jun 03 2009. 03 20 PM IST
London: European shares slipped in early trade on Wednesday after hitting a five-month high in the previous session, with the banking sector extending Tuesday’s losses and commodity shares retreating.
At 0831 GMT, the FTSEurofirst 300 index of top European shares was down 0.6% at 880.29 points after falling as low as 876.05. The index, which slumped 45% in 2008, has jumped 37% since falling to a lifetime low in early March.
Banks, which have more than doubled since early March, were among the biggest decliners. Barclays, Standard Chartered, HSBC, Lloyds and Societe Generale fell 2.6-5.1%.
Commodity shares also declined as investors took profits from their recent sharp gains on the back of firmer crude oil and metals prices, traders said.
Tullow Oil, BP, Royal Dutch Shell, BG Group, Repsol, Total and StatoilHydro shed between 0.2 and 3.5%.
But analysts remained positive and said the market was expected to gain in the second half of the year.
“It will not be a one straight line and there can be intermediate corrections, but the corrections should be rather limited in size as well in duration,” said Luc Van Hecka, chief economist at KBC Securities.
“Certainly, the probability of a long, deep recession has receded considerably over the past couple of weeks. The idea that interest rates are expected to remain low should further support the market,” he added.
Britain’s economy could return to growth in the second quarter of this year, the compiler of the closely-watched purchasing managers’ indices said, after its all-sector reading indicated overall growth in May.
Investors awaited US ADP employment and factory orders data for more insight on the economic outlook, a day after upbeat housing data in the United States fuelled further recovery hopes.
Across Europe, the FTSE 100 index, Germany’s DAX and France’s CAC 40 were 0.6-1.6% lower.
Miners also lost ground. BHP Billiton, Anglo American, Antofagasta, Rio Tinto, Xstrata and Eurasian Natural Resources fell 0.1-3.8%.
Bouygues fell more than 5% after it posted a 55% fall in first-quarter operating profit, lagging analyst estimates, and cut its 2009 sales forecast to reflect a change in outlook for its TV channel and lower orders for its construction unit.
Shares in Salzgitter, Germany’s second-largest steelmaker, fell 4.8% after UBS downgraded the company to “sell” from “neutral.
Lloyd’s of London insurer Amlin said it had agreed to buy Fortis Corporate Insurance, a provider of corporate property and casualty insurance, from the Dutch government for €350 million ($497.5 million). Its shares fell 5.9%.
Retailers were on the positive side. Morrison, Sainsbury, Tesco and Carrefour rose 0.2-1.3%.
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First Published: Wed, Jun 03 2009. 03 20 PM IST
More Topics: FTSEurofirst | Stocks | Shares | Equities | Markets |