MW: Europe decline as financials, drug stocks weigh
LONDON (MarketWatch) -- European shares fell for the first time in four days Thursday, as losses for pharmaceutical companies and financials offset a rebound in the fortunes of the big oil companies.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP: news, chart, profile) dropped 1.3% to 202.66, with the move ending three straight sessions of gains for the index. Financial stocks were among the worst performers in Europe, with insurance giant Axa (FR:004507: news, chart, profile) down 4.3%.Selling also pressured drug shares, with Novartis down 2.1% and GlaxoSmithKline off 2%.
"I'm not particularly optimistic. The upside has got to be limited by the fact that the global economy is falling faster than anyone could have predicted. It makes equities vulnerable to bad news," said Peter Dixon, strategist at Commerzbank Corporates & Markets. On the economic front Thursday, the German Ifo Institute said "available business-cycle indicators point to a rapid decline in economic output in the last quarter of 2008." German real GDP is expected to fall 2.2% next year, it said.
There was also some downbeat news out on the U.S. jobs market, after jobless claims rose to a 26-year high. U.S stocks fell in early trading as investors mulled over the data. On a national level, the German DAX 30 index (DX:1876534: news, chart, profile) dropped 1.5% to 4,732.02, the French CAC-40 index (FR:1804546: news, chart, profile) fell 1.2% to 3,281.99. he U.K.'s FTSE 100 index (UK:UKX: news, chart, profile) , which includes many oil producers, lost just 0.2% to 4,360.63. BP shares climbed 3.3% and Royal Dutch Shell shares rose 1.5%.
In energy trading, light sweet crude futures moved higher, with the benchmark contract recently up $2.02 at $45.55 a barrel. See full story.
Autos mostly lower
European automakers fell in Thursday dealings, with shares of Daimler surrendering 4.1% and BMW (DE:519000: news, chart, profile) slipping 1.8%.
Also lower, shares of Fiat (IT:F: news, chart, profile) fell 3.6%. Morgan Stanley downgraded the Italian automaker to underweight from overweight.
Porsche (DE:PAH003: news, chart, profile) declined 0.5%. Morgan Stanley cut its stance on the manufacturer of high-performance and luxury vehicles to underweight from equalweight.
"We are cutting price targets across the board and adjusting ratings as we now model in a two-year economic downturn followed by a recovery to normal margins by 2012," the broker said.
In addition, Morgan Stanley upgraded France's Renault (FR:013190: news, chart, profile) to overweight from underweight.
Late Wednesday, the company said Louis Schweitzer will step down as chairman. Carlos Ghosn will take on the role of chairman while remaining chief executive.
Renault's shares rose 0.1%. Inditex up
Retailers were also in the headlines, with shares of Spain's Inditex (ES:014839601: news, chart, profile) erasing early losses to trade up 3.9%.
The fashion retailer's targeting positive comparable sales in 2009. In the six weeks since the end of October, Inditex said has seen growth patterns similar to those of the third quarter.
Net profit in the first nine months of the company's fiscal year rose 2% to 843 million euros ($1.1 billion). Analysts polled by Dow Jones Newswires had, on average, been expecting a net profit of 858.2 million euros.
Outperforming a lower banking sector, shares of Dutch-Belgium banking group Fortis (BE:000380118: news, chart, profile) shot up 11% in Brussels.
Several newspapers in Belgium reported Thursday that the Belgian government may give its 11.6% stake in BNP Paribas to Fortis.
Shares of BNP Paribas (FR:013110: news, chart, profile) declined 0.3%.
ING (ING:
, , ) (NL:30360: news, chart, profile) shares advanced 3.5% after Theodoor Gilissen upgraded the insurance and banking group to buy from hold.
"ING's share price has come down a lot and we see upside potential again," the broker said.
Over in Finland, Outokumpu (FI:OUT1V: news, chart, profile) shares fell 11.9% after the stainless steel maker cut fourth-quarter guidance citing weakening steel demand. It also expects an operating loss of 50 million euros in the quarter and said that it will cut jobs to reduce costs.
Paper producer UPM-Kymmene (FI:UPM1V: news, chart, profile) also cited weaker demand as it said it won't meet fourth-quarter guidance. Shares dropped 9.8%.
