Oil majors pressure, Nokia shares decline in Finland
LONDON (MarketWatch) -- European shares fell on Wednesday, pressured by losses for oil majors and a sharp sell-off for chip maker Infineon Technologies, amid more signs of economic contraction.
The pan-European Dow Jones Stoxx 600 index fell 1.2% to 194.89.
It's been a volatile week so far for the Stoxx 600 index, with massive losses on Monday somewhat balanced by gains on Tuesday.
Oil majors led advancers in the previous session but were among the top decliners on Wednesday, as Total (TOT:
50.26, +3.10, +6.6%) (FR:012027: news, chart, profile) shares fell 4.6% and BP (BP:
45.88, +2.31, +5.3%) (UK:BP: news, chart, profile) shares fell 2.6%.
"We think that the dividend trade has been fully played," said analysts at J.P. Morgan. They noted that the sector has outperformed the broader market by 19% since early October as investors sought defensive qualities and relative dividend safety.
More downbeat economic data came out Wednesday, showing Europe's services sector slowed sharply in November, The services data follows dismal manufacturing data on Monday. See full story.
Economists are now calling for sharp interest rate cuts to shore up the U.K. and euro zone economy when the European Central Bank and the Bank of England meet on Thursday.
"The economy is clearly heading into a severe recession - in all likelihood, worse than the early 1990s. If ever there was a time to break the mould and cut by more than 50 basis points, tomorrow is it," said Dominic Bryant, economist at BNP Paribas ahead of the ECB decision.
On a national level, the German DAX 30 index (DX:1876534: news, chart, profile) dropped 2.3% to 4,430.20, the French CAC-40 index (FR:1804546: news, chart, profile) fell 1.8% to 3,095.35 and the U.K. FTSE 100 index (UK:UKX: news, chart, profile) lost 1% to 4,080.79.
U.S. stock futures declined on Wednesday morning.
Research in Motion (RIMM:
37.32, -2.48, -6.2%) , the producer of the iconic BlackBerry mobile-communications system, cut its estimates of fiscal third-quarter earnings and sales on Wednesday. See Indications. See full story.
Shares of Finnish mobile handset maker Nokia (NOK:
2.03, -0.04, -1.9%) (DE:623100: news, chart, profile) slumped 26.3%. The firm's fourth-quarter net loss widened to 763 million euros ($968.8 million), from 280 million euros a year ago, with revenue almost flat at 1.2 billion euros. See full story.
Analysts at Merrill Lynch said that the loss was much worse than expected and that the firm's first-quarter revenue guidance compares unfavorably to the firm's peers.
Infineon rival STMicroelectronics (STM:
6.27, +0.17, +2.8%) (FR:012970: news, chart, profile) traded flat in Paris, outperforming the broader French market.
Autos were under pressure after some harsh declines in U.S. vehicle sales. Read more on U.S. auto sales.
BMW (DE:519000: news, chart, profile) shares fell 4.2%. November U.S. sales for the group dropped 26.8% to 19,762 vehicles,
Volkswagen (DE:766400: news, chart, profile) shares fell 2% after its Audi of America unit said its U.S. November sales fell 25.4% to 6,788.
Daimler (DAI:
29.90, +1.71, +6.1%) (DE:710000: news, chart, profile) fell 3.8%. November U.S. sales fell 29.9% to 15,991 units.
Turning to potential deals and Electricite de France (FR:EDF: news, chart, profile) shares fell 5.7%.
The Paris nuclear utility proposed to buy as much as $6.5 billion of assets from Constellation Energy Group (CEG:
25.15, +1.22, +5.1%) , the Baltimore power provider.
Constellation has a deal in place to be acquired by MidAmerican Energy Holdings Co., controlled by Warren Buffett's Berkshire Hathaway (BRKA:
101,499.00, +3499.00, +3.6%) (BRKB:
3,336.00, +56.00, +1.7%) for $26.50 a share, or $4.7 billion. See full story.
Arcandor (DE:627500: news, chart, profile) shares jumped 10.7%.
It said that Karl-Gerhard Eick will start as chief executive of the firm in March. Speculation about that appointment emerged late Tuesday after Deutsche Telekom (DE:555750: news, chart, profile) announced that Eick will resign as its chief financial officer.
