European shares fall as miners, oil majors pressured

European shares fall as miners, oil majors pressured

London: European share prices fell to a one-month low on Monday, with a major index holding below a key technical level as concerns over the pace of economic recovery put pressure on miners and oil majors.

By 1042 GMT the pan-European FTSEurofirst 300 index of top shares was down 0.4% at 1,053.61 points.

The index earlier hit a one-month intraday low at 1,047.29 points and is on track to fall for a sixth straight session, its longest losing streak since January 2009.

In a bearish signal for equities, the Euro STOXX 50 index was down 0.8% at 2,711.61 points, holding below its 50% Fibonacci retracement of its fall from a high in April to a low in May at 2,737.62 points.

The appetite for risky assets such as equities fell, with the VDAX-NEW volatility index rising 5% to a one-month high. The higher the index, which is based on sell and buy options on Frankfurt’s top-30 stocks index, the lower the market’s desire to take risk.

Mining stocks were among the biggest fallers, with Eurasian Natural Resources, Kazakhmys and BHP Billiton down 0.6% to 1.5%, as metals prices retreated across the board.

Heavyweight oil majors were also lower as crude prices fell back from earlier highs. BP, ENI and Total lost 0.9% to 1.6%.

Analysts said investors might be reluctant to take large positions ahead of key data due later in the week, including US employment figures on Friday, which is likely to provide fresh clues on the health of the economy.

“We’re seeing profit-taking in the commodities sector and a bit of a pause for breath whilst investors and traders gauge economic data. Economic data will dictate a lot of short-term moves this week," said Joshua Raymond, market strategist at City Index.

US durable goods orders and pending home sales for August are set for release at 1400 GMT.

Across Europe, Britain’s FTSE 100, Germany’s DAX and France’s CAC 40 share indexes were down 0.5%-1.0%.

Carmakers Fall, Swiss Banks Edge Up

The Stoxx 600 European autos sector index slid 2.2%, with BMW, Daimler AG, Renault and Fiat down 2% to 2.8%.

On the banking front, Switzerland has set out to further tighten the reins on UBS and Credit Suisse, requiring them to hold capital in excess of the new international standards.

But UBS and Credit Suisse rose 0.1% and 0.8% respectively, against a 0.1% rise on the STOXX Europe 600 banking index

“These (Swiss capital rules) are at the better end of expectations and hence should be a positive catalyst for the shares," analysts at Nomura wrote in a note.

Meanwhile the New Economics Foundation (NEF) thinktank said British banks may need another state bailout next year and their borrowing requirements could hit £25 billion ($39.4 billion) a month.

Part-nationalised British banks Royal Bank of Scotland rose 0.1% while Lloyds Banking Group lost 0.1%.

Among other fallers, french drugmaker Sanofi-Aventis fell 0.4% after it launched a hostile bid for US firm Genzyme at $69 per share, or $18.5 billion, setting off what could be a protracted battle for control of the biotech company.

Gas Natural shed 3.2% on fears that a negative ruling in its gas price dispute with Algeria’s Sonatrach could threaten dividend payments.