Several 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 (ST:SXXP: news , chart , profile ) fell 0.8% to 194.84 in Monday's action.
Autos were among the worst performers, with shares of Volkswagen (DE:766400: news , chart , profile ) down 7%. BMW (DE:519000: news , chart , profile ) saw its shares retreat 3.1%, while Daimler
shares dropped 3.4%.
Shares of Michelin (FR:012126: news , chart , profile ) also fell, down 3%. 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.
Meanwhile, poor euro zone industrial production orders underscored the tough economic backdrop for all companies. Orders fell a much sharper-than-expected 4.7% month-on-month and 15.1% year-on-year in October.
Overall, the French CAC-40 index (FR:1804546: news , chart , profile ) declined 1.4% to 3,180.00, while the German DAX 30 index (DX:1876534: news , chart , profile ) lost 0.7% to 4,667.42 and the U.K.'s FTSE 100 index (UK:UKX: news , chart , profile ) fell 0.2% to 4,280.71.
U.S. stocks started on a mixed note on Monday. See U.S. Market Snapshot.
Banks in focus
Banks were also under pressure across most of Europe to start the week, with Unicredit (IT:UCG: news , chart , profile ) down 3.3% and Deutsche Bank (DE:514000: news , chart , profile ) down 4.1%.
Also lower, shares of Dexia (BE:000379613: news , chart , profile ) dropped 3.9%. 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 1.6% to 364.97 as shares of Allied Irish Banks (UK:ALBK: news , chart , profile ) jumped 18.3% and Bank of Ireland (UK:BKIR: news , chart , profile ) 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 (DE:843002: news , chart , profile ) rose 0.9%.
American International Groupsaid 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 9.1%.
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. See full story.
Deutsche Bank upgraded the firm to hold from sell,
"Post Qimonda's weekend life extension with government support, Infineon's low market capitalization now makes the stock essentially a call option on a government bailout and/or improving end markets," the broker said.
