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European markets end lower

European markets end lower

European shares snapped a seven-session winning streak with sizable losses Tuesday, with Barclays pacing a decline in the banking sector prompted by worries about exposure to ongoing credit-market woes.
The French CAC-40 index skidded 2.1 percent to 5,474.17 and the German DAX 30 index drifted 0.7 percent lower at 7,430.24. The U.K.'s FTSE 100 index, after a three-day break, slipped 1.9 percent at 6,102.20.
The declines accompanied losses in Asia and in early trading on Wall Street.
Barclays declined 3.6 percent after a report in the Financial Times said that exposure from its link to German lender Sachsen LB may total "several hundred million dollars." Barclays had provided up backup financing to one of four vehicles that Barclays Capital set up for the German bank, the report said. Barclays Capital denied that it has "heavy" exposure to the investment vehicles.
Sachsen was sold to LBBW over the weekend.
Tuesday's European decline "is probably a response to what's reported to have happened to Barclays," noted Mike Lenhoff, chief strategist at Brewin Dolphin stockbrokers. "Financials are definitely geared to the underlying issue playing in the market at the moment _ the subprime fallout."
Other financials under pressure included BNP Paribas, shares of which fell 3.4 percent, and Deutsche Bank, down 1.7 percent.
Bear Stearns downgraded BNP Paribas on Tuesday, while also upgrading French rival Societe Generale to outperform, citing recent price performance. It also lowered 2009 earnings estimates for the French banks it covers by about 7 percent. Societe Generale shares slipped 2.9 percent.
In Amsterdam, shares of Carlyle Capital finished just 0.3 percent lower in thin trading. The US$18 billion Dutch investment fund run by a Carlyle Group affiliate received its second bailout in a week, as its chief executive warned that the current credit-market turbulence is worse than the problems that brought about the demise of Long-Term Capital Management nine years ago.
Shares of Versatel dropped more than 28 percent as the German telecom warned of further price reductions in the broadband market and said revenue growth would slow.
Hi-Media slipped 1 percent after the Internet services group agreed to buy Fotolog for EUR65.8 million in a cash-and-shares deal.
Deutsche Post dropped 2.8 percent after Goldman Sachs downgraded the mail and logistics company to sell from buy, saying that a delay to German mail liberalization, scheduled for 2008, now seems unlikely and that this implies volume loss and margin erosion for Deutsche Post.
Hermes shares lost 1.8 percent as Dresdner Kleinwort analysts suggested that clients switch out of the luxury-goods mainstay _ on which it has a sell rating _ and into buy-rated Richemont.
"The recent market turmoil has left Richemont's shares at a discount to both the sector and LVMH, while Hermes shares outperformed the market in the last month due to renewed bid speculation," the broker said.
Richemont shares slipped 2.3 percent and LVMH Moet Hennessy fell 2 percent.
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Sarah Turner is a correspondent of Dow Jones Newswires.


Updated : 2021-05-13 09:22 GMT+08:00