Air France-KLM, Carnival Corp. shares under pressure again
European shares fell on Tuesday as bank stocks took a beating on capital concerns, while shares in travel and tourism firms were hit once again amid continued fears of an influenza pandemic.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP: news , chart , profile ) fell 2.3% to 192.03.
Banks were by far the worst performers in the index, with HSBC Holdings BNP Paribas and Barclays shares down around 3% to 4% each.
Reports out Tuesday brought lender's capital positions back into focus. The Wall Street Journal reported that Bank of America Corp. and Citigroup Inc. may need to raise more capital while the Financial Times reported that Britain's largest banks may be forced to adopt higher capital ratios. See full story.
"There is far to go yet before the global banking system returns to normality, with significant concerns remaining over banks' balance sheets and the level of capital requirements," noted Deirdre Ryan, strategist at Ireland's Goodbody Stockbrokers.
Deutsche Bank shares fell 6.9%, moving back from gains made Monday.
The lender returned to profit in the first quarter of 2009 thanks to a surge in revenue from bond sales and trading, though it took further write-downs on its exposure to bond insurers. See full story.
On a regional level the U.K. FTSE 100 index (UK:UKX: news , chart , profile ) fell 2.1% to 4,078.78, the German DAX 30 index (DX:1876534: news , chart , profile ) lost 2.7% to 4,569.44 and the French CAC-40 index (FR:1804546: news , chart , profile ) declined 2.5% to 3,026.30.
Asian equity markets and U.S. stock futures were lower, with the Dow Jones Industrial Average futures down 108 points. Read more on Asian markets.
Meanwhile, travel stocks and airlines were pressured again after the number of confirmed and suspected cases of swine flu worldwide rose Tuesday and the World Health Organization increased its alert level on the deadly disease. Read more on flu.
"Until there is more clarity, markets will continue to focus on swine flu newsflow. At this stage, we see the key concern as tourism," said analysts at UniCredit.
Shares of Air France-KLM fell 2.2% and shares of Carnival Corp. declined 6%.
Irish airline Aer Lingus (UK:AERL: news , chart , profile ) saw its shares plummet 19.7%.
It said that it believes the average fare trend for 2009 will be worse than previously expected and now expects a loss materially below the bottom of the range of current market expectations.
Although most mineral extractors and oil producers were lower, with Xstrata shares down 8% and Total shares down 1.4%, shares of oil giant climbed 1.4%.
Its first-quarter adjusted net profit drop wasn't as bad as analysts had been expecting. Net profit fell 64% to $2.56 billion. Daimler hares fell 5.3%.
The German automaker lost 1.29 billion euros ($1.7 billion) during the first quarter as sales of everything from luxury cars to 18-wheel trucks slumped. Daimler earned 1.33 billion euros during the same period last year.
Late Monday, the firm reached a deal to unload what was left of its failed marriage with Chrysler. It's going to pay $200 million for three years to secure pension payments, will forgive the repayment of loans and dispose its 19.9% Chrysler stake. See full story.
Other autos were also under pressure, with Renault (FR:RNO: news , chart , profile ) shares down 7.8% and BMW (DE:BMW: news , chart , profile ) shares down 6.1%.
Still, Yara (NO:YAR: news , chart , profile ) shares rose 6.9% after the fertilizer firm said that its first-quarter net profit fell 68% to 877 million Norwegian kroner. Operating profit fell to 1.19 billion kroner but exceeded analyst forecasts.
"Production curtailments helped support prices and, looking ahead, the company is expecting tightening grain markets to lead to a recovery in fertilizer demand next season," noted analysts at Barclays Wealth.
