Aviva, Santander shares decline; investors still fret about economy
European shares gave back some of this week's gains on Thursday, with financials and commodity stocks under some selling pressure as investors continue to fret about the global economic backdrop.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP: news , chart , profile ) declined 1.1% to 164.48, paring gains made since the start of the week to roughly 3%.
"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," noted Edmund Shing, strategist at BNP Paribas in Paris.
"The messages that are coming out on the economic front are still very negative," he also noted.
On Thursday, the Swiss National Bank said it would take exceptional steps to prevent a deflationary spiral, including intervention in foreign-exchange markets to arrest the Swiss franc's rise versus the euro. See full story.
Overall, the French CAC-40 index fell 1.4% to 2,636.04, the German DAX 30 index lost 1.6% to 3,852.33 and the U.K. FTSE 100 index declined 0.8% to 3,665.86.
Across the Atlantic, U.S. stocks traded lower. Mortgage lender Freddie Mac declined after it said late Wednesday that it's getting billions of dollars in extra government support after reporting a quarterly loss of $23.9 billion. Financials were some of the worst performers in Europe on Thursday, with shares in U.K. insurer Aviva down 15.1%.
Citigroup cut Aviva to sell from hold, saying there is a risk that the firm may need to raise more capital.
Of banks, Santander shares were down 1.7% and Unicredit shares were also down -- 2.2%.
Oil producers pressured
Of oil producers, Total shares fell 2.1% and Repsol shares declined 1.8%.
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 over $43 a barrel on Thursday. Miners, although up 3% so far this week, were also lower on Thursday, with Rio Tinto shares down 4.7% and Xstrata down 7.5%.
Still, drugmakers were higher on Thursday, with Roche Holding shares up 1.2%.
It has agreed to acquire the stake in biotech giant Genentech that it doesn't already own for $95 a share. The deal values Genentech at $46.8 billion. Roche expects the deal to add to earnings in the first year after closing. "Today's announcement of an agreement reached at $95 for outstanding Genentech shares is positive, in our view, as Genentech is an integral component to Roche's future growth," said analysts at Sal Oppenheim.
Shares of French retail giant Carrefour (FR:CA: news , chart , profile ) rose 3.7%.
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. See full story.
German automaker Volkswagen's (DE:VOW: news , chart , profile ) shares climbed 1.5%. 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.
