Cyber Monday Deal: Up to 60% off InvestingProCLAIM SALE

European shares slip on worries in banking sector

Published 10/14/2010, 01:11 PM
Updated 10/14/2010, 01:16 PM

* FTSEurofirst 300 down 0.2 percent, slips from 5-month highs

* Banks slip on capital requirement concerns

* Miners among the gainers as weak dollar boosts metals

By Harpreet Bhal

LONDON, Oct 14 (Reuters) - European shares slipped on Thursday, with banks pressured by ongoing capital worries and mirroring weak U.S. lenders, after a mortgage industry probe raised fresh concerns about the sector's recovery.

The pan-European FTSEurofirst 300 index of top shares closed 0.2 percent lower at 1,084.67 points in a choppy session, after earlier trading at a five-month intraday high of 1,094.13 points.

Banks were weak after Standard Chartered's launch of a $5.3 billion rights issue to shore up its finances sparked concerns other lenders would have to follow suit to meet fresh capital requirements. Barclays, Societe Generale and BNP Paribas fell 3.1 to 4.1 percent.

The sector was also weighed down by falls in U.S. lenders after all 50 U.S. states launched a joint investigation of the mortgage industry -- a move that could threaten the recovery of the housing market.

"There is news out of the U.S. on investigations into home foreclosures. That's causing some uncertainty for the banks," a London-based trader said.

Further losses were limited as heavyweight mining shares pushed higher, with the STOXX Europe 600 basic resources index up 0.9 percent, boosted by firm metals prices as the dollar continued to weaken on expectations the U.S. Federal Reserve would increase asset purchases to bolster the recovery.

The technical picture signalled a bullish trend as the blue-chip Euro STOXX 50 stayed above a key resistance of 2,740.32, its 61.8 percent retracement of an April high to a May low for the second day in a row.

"Technical outlook is good because we have buy signals after a sideways movement during the last six months. There is high momentum to the upside," said Achim Matzke, technical strategist at Commerzbank in Frankfurt.

Across Europe, Britain's FTSE 100 and France's CAC 40 fell 0.4 and 0.2 percent, respectively, while Germany's DAX rose 0.3 percent.

EARNINGS IN FOCUS

Investors are likely to look to further corporate earnings in the United States for direction, with Google reporting quarterly figures after U.S. markets closed on Thursday and General Electric releasing figures on Friday.

"Equities are not looking desperately overpriced at the moment. For the next two to three weeks it is the earnings season that is going to fuel the equity market," said Lothar Mentel, chief investment officer at Octopus Investments.

Among individual movers, Actelion rose 6.6 percent on renewed market talk the Swiss biotech group could be the next bid target in the pharmaceuticals sector.

Heavyweight Vodafone rose 1.6 percent following an upgrade from Nomura, which cited strong costs reduction.

On the downside, Belgian supermarket group Delhaize fell 4.7 percent after a downbeat note by brokers Deutsche Bank, which cut the firm's target price. (Additional reporting by Atul Prakash; Editing by Karen Foster)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.