Trio of Irish banks buck Monday's lower trend; Infineon rallies
LONDON (MarketWatch) -- European shares declined in the first session of a holiday-shortened week, as banks weighed and autos came under pressure amid more evidence of tough trading conditions for the sector.
The pan-European Dow Jones Stoxx 600 index fell 1.6% to 193.26 in Monday's action.
Autos were among the worst performers, with shares of Volkswagen down 9.4%. BMW saw its shares retreat 2.7%, while Renault sank 2.1%.
Shares of Michelin also fell, down 4%. The French tire maker said that it will take a charge of 150 million euros against results for the fourth quarter due to a decline in tire markets in November.
Helping set the tone for Europe's automotive sector, Toyota Motor Corp. earlier slashed its forecast for profit, revenue and unit sales in the year ending March 31, citing a pronounced slump in the global automobile market as well as the Japanese yen's sharp appreciation against major currencies. See full story.
Overall, the French CAC-40 index declined 1.3% to 3,183.37, while the German DAX 30 index lost 0.9% to 4,652.59 and the U.K.'s FTSE 100 index fell 0.8% to 4,251.76.
U.S. stock futures churned about, indicating a mixed open. See Indications.
Stocks ended mostly higher last week on Wall Street, as investors drew a sigh of relief after the White House stepped in to rescue automakers, offsetting worries that an industry breakdown would deepen the recession ensnaring the world's biggest economy. See Friday's U.S. Market Snapshot.
Banks were also under pressure across most of Europe to start the week, with Unicredit down 4% and Deutsche Bank down 3.4%.
Also lower, shares of Dexia dropped 6.3%. The lender was downgraded to hold from buy at WestLB.
"Following the unprecedented turmoil on the financial markets we have significantly reduced our earnings-per-share estimates on Dexia for 2008 and the following years," the broker said.
However, the Irish Iseq 20 index climbed 1.4% to 364.25 as shares of Allied Irish Banks jumped 22.1%, Anglo Irish Bank climbed 1.8% and Bank of Ireland surged 40.9%.
Over the weekend, the Irish government said it would invest 5.5 billion euros ($7.68 billion) in the three banks as part of a financial rescue package. See full story.
Also in financials, shares of Munich Re edged down 0.1%.
American International Group said that it will sell the parent of Hartford Steam Boiler Inspection & Insurance Co., a worldwide provider of equipment breakdown and engineered lines insurance and reinsurance, to Munich Re for $742 million. Munich Re will assume $76 million of outstanding capital securities.
A big winner were shares of Infineon Technologies , up 10.6%.
Over the weekend, the chipmaker's majority-owned Qimonda unit arranged a finance package valued at 325 million euros.
Uncertainty surrounding Qimonda's refinancing has been weighing on Infineon shares, down fully 90% over the past 12 months. Infineon spun off the company in 2006.
