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European stocks fall on concerns over oil, US economy

European stocks fall on concerns over oil, US economy

LONDON _ European shares ended February on a downbeat note Friday, as financial stocks again pressured the main indexes, as concerns over the struggling U.S. economy and triple-digit oil prices continued to depress sentiment.
The Dow Jones Stoxx 600 index slipped 1.4 percent to 318.95, leading the pan-European stock market index to close February with a small loss.
Of national indexes, the German DAX 30 index dropped 1.7 percent to 6,748.13, the French CAC-40 index lost 1.5 percent to 4,790.66 and the U.K.'s FTSE 100 index closed down 1.4 percent to 5,884.30.
Once more, banking shares accounted for some of the biggest European losses as worries about problems related to the U.S. subprime-housing market refused to go away.
On Thursday, insurance giant American International Group reported a US$5.29 billion (euro3.49 billion) fourth-quarter loss while Thornburg Mortgage and hedge fund firm Peloton Partners LLP reported they were hurt by exposure to Alt-A home loans.
On Wall Street, stocks slid more than 200 points early in the session Friday as Dell's poor results also weighed.
"In order to move forward we need some degree of confirmation that economic prospects are going to improve," said John Haynes, senior equity strategist at Rensburg Sheppards in London.
Among European banks, shares of UBS slipped 3.7 percent and Credit Suisse lost 2.8 percent in Swiss trading, while shares of Britain's HBOS declined 5 percent.
"Until there's a better handle on the end of the subprime-related issues then people are not going to give the financials any credit, although they might refrain from punishing them if they can demonstrate good results," said Haynes.
HSBC Holdings fell 1.8 percent ahead of its financial results on Monday. The consensus forecast calls for pretax profit to reach 25.1 billion pounds US$49.8 billion (euro32.83 billion).
HSBC also on Friday disclosed exclusive talks with Groupe Banque Populaire over selling seven French regional-bank subsidiaries for euro2.1 billion (US$3.2 billion).
Analysts and strategists have been concerned that slowing economic growth might mean that profit estimates could fall, and earnings reports are being closely watched for management's take on the business outlook and profit levels.
Friday's batch of earnings, including releases from insurance giant Swiss Re and media firm Vivendi, garnered mixed reactions.
Shares of Swiss Re climbed 5.2 percent. The world's largest reinsurance firm said 2007 net profit fell 9 percent from the previous year's record, but it still managed to beat market expectations. The company also revealed a further 240 million Swiss francs in write-downs.
Meanwhile, shares of Vivendi fell 1.6 percent in Paris. The media, music and telecom conglomerate posted a 16 percent increase in fourth-quarter adjusted profit to euro585 million (US$888 million) on strong growth at its Moroccan phone division and an improved performance at its Canal Plus Pay-TV unit.
However, Vivendi also forecast 2008 profit growth on a scale similar to that recorded in 2007.
"This implies adjusted net income of about euro3.06 billion, slightly below our forecast of euro3.12 billion," said media analyst Nick Bell at Bear Stearns.
Still with earnings, German automaker Volkswagen AG reported a 50 percent jump in annual profit, two weeks ahead of its schedule report date. The shares finished flat.
Shares of advertising firm WPP Group fell 2.5 percent in London, erasing early gains.
WPP Group, owner of such agencies as Young & Rubicam, Ogilvy & Mather and JWT, said it didn't share the "gloomy" view that many hold on the world economy. Profit rose 7 percent to 515.1 million pounds (US$1.02 billion; euro670 billion), or 38 pence a share, with revenue up 5 percent
Exporting industrials and technology companies were also in focus. Shares of Siemens came under pressure, down 3.4 percent, and shares of Alcatel-Lucent fell 3.5 percent as the euro held above US$1.52 against the dollar.
Fuel-sensitive airlines traded lower as crude-oil prices gyrated near $102 a barrel. In London, shares of low-cost airlines easyJet and Ryanair Holdings both fell more than 4 percent.
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Sarah Turner is a correspondent for Dow Jones Newswires.


Updated : 2021-04-14 06:49 GMT+08:00