Santander and BNP Paribas decline; investors still fret about economy
European shares gave back some of this week's gains on Thursday, with banks and commodity stocks under a bit of selling pressure as investors continue to fret about the economic backdrop.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP: news , chart , profile ) declined 1.6% to 163.67, paring gains made since the start of the week to just under 3%.
"The messages that are coming out on the economic front are still very negative," noted Edmund Shing, strategist at BNP Paribas in Paris.
"The market's still a little uncertain. We've had a two-day rally and now people are waiting to see what happens next. That's par for the course in the volatility that we've seen recently," he added.
Still, he pointed out that sentiment is extremely bearish. "It doesn't take a lot from that position - when people are very underweight in equities in general - to see a big move to the upside," he noted.
Overall, the French CAC-40 index (FR:1804546: news , chart , profile ) fell 2.2% to 2,615.29, the German DAX 30 index (DX:1876534: news , chart , profile ) lost 2.1% to 3,831.43 and the U.K. FTSE 100 index (UK:UKX: news , chart , profile ) declined 1.4% to 3,642.58.
U.S. stock futures were pointing to a lower open across the Atlantic on Thursday. Mortgage giant Freddie Mac said late Wednesday that it's getting billions of dollars in extra government support after reporting a quarterly loss of $23.9 billion. See Indications.
Banks were some of the worst performers in Europe on Thursday, with Santander (STD:
, , ) (ES:SAN: news , chart , profile ) down 5.2% and BNP Paribas (FR:BNP: news , chart , profile ) down 4.8%.
Insurer (DE:ALV: news , chart , profile ) Allianz dropped 4.2%.
Shares in U.K. insurer Aviva (UK:AV: news , chart , profile ) dropped 14%. Citigroup cut Aviva to sell from hold, saying there is a risk that the firm may need to raise more capital.
Still, some companies managed to gain ground Thursday, with Belgian financial firm Dexia (BE:DEXB: news , chart , profile ) up almost 30% and French lender Natixis (FR:KN: news , chart , profile ) up 14%.
Oil producers pressured
Of oil producers, Total (TOT:
, , ) (FR:FP: news , chart , profile ) shares fell 2.6% and Eni (IT:ENI: news , chart , profile ) shares declined 1.6%, with Repsol (ES:REP: news , chart , profile ) shares down 2.8%.
The losses followed a 7% drop in crude-oil futures in New York on Wednesday, after data showed an unexpected increase in U.S. crude inventories. Crude futures were trading just over $43 a barrel in Thursday's electronic session. See full story.
Royal Dutch Shell (UK:RDSA: news , chart , profile ) declined 1.6%. It said that Simon Henry will take over as its finance chief from May 1. See full story.
Miners were also weak, with Rio Tinto (RTP:
, , ) shares down 3.5% and Xstrata (UK:XTA: news , chart , profile ) down 6.1%.
Roche Holding (CH:ROG: news , chart , profile ) (RHHBY:
, , ) shares rose 1% after the firm said that it has agreed to acquire the stake in biotech giant Genentech (DNA:
, , ) that it doesn't already own for $95 a share. The deal values Genentech at $46.8 billion.
Roche, which already holds 56% of Genentech, expects the deal to add to earnings in the first year after closing, and to generate pretax annual cost synergies of $750 million to $850 million. See full story.
Aegon on track for cost targets
Shares of Dutch life insurance and pension provider Aegon (NL:AGN: news , chart , profile ) rose 1.4%.
It's on track to deliver targeted cost reductions in 2009 and also said that its capital position remains strong despite its previously announced 1.2 billion euro net loss for the fourth quarter. See full story.
Shares of French retail giant Carrefour (FR:CA: news , chart , profile ) rose 2.4%. It reported a nearly 45% drop in 2008 net income to 1.2 billion euros but maintained its dividend and said its focus in 2009 will be on cost savings and generating more organic growth than the overall market.
German automaker Volkswagen's (DE:VOW: news , chart , profile ) shares climbed 0.8%. Sales and earnings will be lower in 2009 due to a drop in auto sales but the firm also remains committed to its 2018 goals.
Swiss watchmaker Swatch (SWGNF:
, , ) (CH:UHRN: news , chart , profile ) pulled back from an early advance to drop 7.4%.
Its 2008 net income fell to 838 million Swiss francs from 1 billion francs a year earlier. The group is anticipating a challenging environment for 2009, particularly in the first months of the year, but is planning for modest growth.
