European shares fall on debt worries; M&A in focus

European shares fall on debt worries; M&A in focus

London: European shares fell for a second straight session on Monday on caution ahead of the start of the earnings season and on lingering worries about the euro zone debt crisis, though merger and acquisition news limited losses.

Danisco soared 26% after US chemicals group DuPont said it would buy the Danish food ingredients and enzymes firm for $5.8 billion to boost its position in the fast-growing food sector.

At 2:13pm, the pan-European FTSEurofirst 300 was down 0.7% at 1,136.02 points. Spain’s IBEX, Portugal’s PSI 20 and Belgium’s blue-chip index fell 1.3 to 2.6%, while the Thomson Reuters Peripheral Eurozone Countries Index was down 1.7%.

Investors kept an eye on the sovereign debt situation. A senior euro zone source said on Sunday pressure was growing on Portugal from Germany, France and other countries to seek financial help from the EU and IMF to stop the bloc’s debt crisis from spreading.

“The debt crisis is still a feature in the background. We did see some disappointment as far as Portugal is concerned in terms of the rates they are paying. Some other countries will also be approaching the debt market in the near term," said Keith Bowman, equity analyst at Hargreaves Lansdown.

“There is a lot of anticipation ahead of the results. It’s important for investors to see how companies on the ground have performed. The actual figures will be very important for general sentiment."


US aluminium giant Alcoa Inc is set to release results on Monday after the market’s close, launching the quarterly earnings season. Intel and JPMorgan Chase & Co will issue their report cards during the week.

Banks were among the top losers, with the STOXX Europe 600 banking index down 1.7% on worries about the European debt situation. Portugal’s BCP fell 5.6%,while KBC Groep was down 6.6%.

Miners also lost ground as copper prices slipped on rising stocks. The STOXX Europe 600 Basic Materials index fell 1.5%, while Xstrata dropped 2.1%.

In other M&A news, Smith & Nephew rose 11.6% after a report said it rejected a 7 billion pound ($10.9 billion) takeover approach from US rival Johnson & Johnson (J&J) late last year.

“There is no question that J&J has the firepower to buy Smith & Nephew. Strategically, there would be synergies to be extracted, within J&J’s Depuy orthopaedics business as well as J&J’s wound businesses," Investec said in a report.

“It would also help J&J offset some of the pressure on its pharmaceuticals business."

French drugmaker Sanofi Aventis SA was down 1.1%. The company said on Sunday it was in discussions with US bid target Genzyme Corp over ways to value a key Genzyme drug, in a sign the two sides are moving closer to a deal.

Across Europe, Britain’s FTSE 100, Germany’s DAX and France’s CAC 40 fell 0.5 to 1.2%.