MW: Europe stocks lose ground as banks take pounding
By Steve Goldstein, MarketWatch
LONDON (MarketWatch) -- Europe stocks dropped in midday trade Wednesday, with banks getting pounded for the third straight session as investors fretted that government injections and interest-rate cuts weren't enough to put the institutions on better footing.
The pan-European Dow Jones Stoxx 600 fell 1.3% to 199.35, with the index shedding 7% over the past month of trade.
Banks paced the downturn. Shares of Holland's ING dropped 8.8%, France's BNP Paribas fell 9.5%, Credit Suisse fell 5.1% and Germany's Hypo Real Estate skidded 12.7%.
Analysts at UBS said 2009 will be a "dreadful year for bank earnings" though not necessarily a gloomy one for stock prices. "A positive market reaction can stem from a realization that the possibility of an even worse outcome has diminished," they said.
"With the authorities now reflating the system at seemingly any cost, we believe the catalysts for such a shift may well be underway."
Its least favored stocks are Allied Irish Banks , Banco Santander and Banco Sabadell for their exposures to the bubbles in Spain and Ireland, Danske because of its exposure to potential policy errors in Denmark and Credit Suisse on the expectation that profit margins in its wealth business will contract into 2009.
Separately, Commerzbank downgraded its Hypo rating to sell from reduce, saying the firm will be burdened by restructuring expenses and costs related to the 50 billion euro liquidity facility from a syndicate and the Bundesbank.
By region, the U.K. FTSE 100 fell 1.9% to 4,130.79, the German DAX 30 dropped 1.3% to 4,519.93 and the French CAC 40 (FR:1804546: news, chart, profile) lost 1.6% to 3,167.63.
U.S. stock futures also were pointing to a down Wednesday following an up Tuesday, with futures on the Dow Jones Industrial Average dropping 131 points.
Among movers in Europe, BASF slumped 10% as the world's biggest chemicals firm announced 20,000 job cuts and warned that adjusted earnings before interest and tax won't grow this year.
SolarWorld tumbled 16% as the solar products maker offered to buy four Opel plants from General Motors for 250 million euros cash.
Experian climbed 8.6% as the credit-checking firm said third-quarter organic revenue should be around first-half levels of 3% growth. The group's first-half adjusted pretax profit rose 9%.
Mining group Xstrata shares dropped 7.3%. Xstrata shares have felt particular pressure not just as metals prices have declined, but also as credit-default swaps on its top shareholder, the commodities trader Glencore, have widened.
Novartis shares rose 1% as the Swiss drugmaker made a presentation on research and development, saying it's working on several drugs to combine heart medicine Rasilez with others in a single pill. Novartis also is planning to file for approval on its multiple-sclerosis drug FTY720 early next year and will file for approval of a smokers-cough product later this year.
AstraZeneca , meanwhile, lost 4.9% as the company said the Food and Drug Administration has approved a copycat version of an asthma treatment. Teva Pharmaceutical has the option of launching an "at-risk" generic version without waiting for the resolution of a patent case filed by AstraZeneca.
Teva would have to pay triple the damages if it sold a copycat version and then lost the case.
