RTRS: European stocks close at lowest level for 5-1/2 yrs
By Atul Prakash
LONDON, Nov 19 (Reuters) - European stocks fell to a 5-1/2-year closing low on Wednesday, led down by banks and commodities on concerns over a deep recession, while profit worries punctured BASF (BASF.DE: Quote, Profile, Research, Stock Buzz) and AstraZeneca (AZN.L: Quote, Profile, Research, Stock Buzz).
BASF, the world's top chemicals maker by revenue, underlined worries about global demand by cutting its 2008 profit outlook for the second time in two months. It said it would cut back production, citing a "massive" demand drop.
BASF shares were down 13.7 percent, while drugmaker AstraZeneca slid 11 percent after it said full-year earnings would be at the lower end of its previously stated range.
The FTSEurofirst 300 .FTEU3 index of top European shares closed 4 percent lower at 811.99 points -- the lowest close since May 2003. The benchmark has fallen more than 45 percent this year, compared with gains in the previous five years.
Banks were the worst hit on Wednesday, with BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) shedding 11.2 percent, HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) falling 9.1 percent, Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) down 13.3 percent and Societe Generale (SOGN.PA: Quote, Profile, Research, Stock Buzz) declining 7.8 percent.
HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz), however, gained 2 percent as Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz) investors were expected to approve its takeover of HBOS and a government rescue plan, but the UK bank's executives faced a grilling from unions about the potential for up to 50,000 job cuts due to a deteriorating economic outlook. [ID:nLJ505319]
"The outlook is still very poor and the profit warning from BASF didn't help sentiment," said Edmund Shing, strategist at BNP Paribas in Paris.
"Everyone is staying very defensively positioned and no one is seeing any reason to become more aggressively positioned in risky assets like equities," said Shing.
Gloomy economic data continued to pour in, raising concerns about a prolonged global recession, dampening sentiment and forcing investors to trade cautiously in volatile markets.
U.S. consumer prices dropped at the fastest rate on record in October, new home construction touched a record low and loans for purchases of single-family homes fell to their lowest level in nearly eight years.
A report showed British firms were at their most gloomy about future production levels for nearly three decades. Analysts said Britain's economy was rapidly sliding into its first recession since the early 1990s.
Many economists think the U.S. economy is already in recession even though one has not yet been formally declared. A severe global credit crunch that has sapped demand for commodities and hurt consumers has already driven parts of Europe and Japan into recession.
Mining shares suffered as crude oil's decline deepened to below $54 a barrel, pressured by economic weakness that will further erode the world's demand for fuel.
BP (BP.L: Quote, Profile, Research, Stock Buzz), Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz), gas producer BG Group (BG.L: Quote, Profile, Research, Stock Buzz) and Tullow Oil (TLW.L: Quote, Profile, Research, Stock Buzz) shed between 3.7 and 5.9 percent.
"In the short term there could be a rally, but in the long term cash is king, and investors should buy defensive stocks," said Philippe Gijsels, strategist at Fortis in Brussels.
German solar energy company SolarWorld (SWVG.DE: Quote, Profile, Research, Stock Buzz) tumbled 19 percent after it said it was prepared to acquire cash-strapped carmaker Opel's plants in Germany, but analysts dismissed the plan as unrealistic. [ID:nLJ453801]
UniCredit's (CRDI.MI: Quote, Profile, Research, Stock Buzz) Bank Austria was close to selling for 1.2 billion euros profit-sharing rights in a vehicle that owns stakes in Austrian industrial firms, the Der Standard daily reported on Wednesday. Its shares were up 0.1 percent.
Across Europe, the FTSE 100 .FTSE index was down 4.8 percent, Germany's DAX .GDAXI was 4.9 percent lower and France's CAC 40 .FCHI was down 4 percent. (Additional reporting by Sitaraman Shankar)
