European shares fall on Egypt unrest, rising oil

European shares fall on Egypt unrest, rising oil

London: European shares fell in early trade on Monday, on concern that unrest in Egypt could spread to other parts of the Middle East and cause oil prices to jump further.

At 3:00pm, the FTSEurofirst 300 index of top European shares was down 0.6% at 1,136.67 points, after falling 1% on Friday. The index is on course to record a gain of 1.3% for January.

Airlines and travel operators fell as the unrest in Egypt disrupted schedules and pushed up oil prices, which will add to the cost of jet fuel.

Thomas Cook, Air France and International Airlines fell between 2.9 and 4.2%.

Brent crude hovered just below $100 a barrel on concern anti-government protests in Egypt could spark instability elsewhere in the Middle East and North Africa, a region that produces more than a third of the world’s oil.

“Egypt wouldn’t be a worry in its own right; the worry is that you would have instability in the oil states. Any instability is a negative for markets," said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.

Bucking the trend, Ryanair rose 1.1% after Europe’s biggest low-cost airline said it saw its full-year profit at the upper end of expectations as rising passenger numbers and average fares help offset disruption from strike action and bad weather.

Some energy shares gained, such as Royal Dutch Shell, up 0.6% after an investment recommendation upgrade by Credit Suisse, but others were mostly lower on worries that the threat to future growth prospects from wider unrest in the Middle East would more than offset short-term price gains.

BP fell 0.5% as a row over its dividend looked likely to overshadow the British company’s full-year results as Russian shareholders in its TNK joint venture convened on Monday to consider withholding the $1.8 billion payment.

Banks to fall included Deutsche Bank, Intesa SanPaolo, Royal Bank of Scotland and Societe Generale, down between 2 and 2.9%.

Across Europe, Britain’s FTSE 100, Germany’s DAX and France’s CAC40 fell between 0.6 and 0.8%.

Carrefour rose 2.2% after French newspaper Le Figaro said the world’s No.2 retailer may decide to list stakes in its property arm and Dia discount business at a board meeting on 2 March .

German retail sales posted a surprise fall in December, dipping 0.3% month-on-month in real terms, preliminary data showed.

Away from tensions in Egypt, strategists are largely upbeat on the outlook for markets. “Corporate confidence is supported by where we are in the profits cycle and the outlook for corporate profits," said Evolution Securities in a note.

BP and Banco Santander are among major European companies reporting this week.

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