SABMiller lower in London; British Airways strike injunction lifted
\By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares fell Thursday afternoon as investor jitters climbed, with sentiment turning particularly negative towards miners and automakers.
After rising as high as 246.16 early in the session, the Stoxx Europe 600 index (ST:SXXP 237.50, -6.21, -2.55%) declined 2.3% to 239.13.
"Every little rally is being sold into, It just shows how nervous this market is," said Philippe Gijsels, head of strategy and BNP Paribas Fortis Global Markets.
Germany's go-it-alone decision to ban naked short selling on Wednesday didn't do much to convince investors that European leaders are taking a united stand to tackle the region's debt problems and the euro fell another 0.1% to $1.2375 against the dollar on Thursday.
Of the main benchmark equity indexes, the German DAX index (DX:DAX 5,844, -144.87, -2.42%) fell 2.1% to 5,862.14, the French CAC-40 index (FR:PX1 3,412, -99.54, -2.84%) lost 2.6% to 3,422.21 and the U.K.'s FTSE 100 index (UK:UKX 5,055, -102.69, -1.99%) lost 1.8% to 5,067.90.
Asian shares traded lower and U.S. stocks opened with losses.
"It's just absolute fear in the markets at the moment and money markets remain very, very tight," said Stephen Taylor, strategist at Dolmen Stockbrokers.
"I think that the market's starting to look forward a bit to lower growth, particularly in Europe. There's a lot of money going into bonds at the moment," he said.
While German government bond yields -- which move inversely to prices -- dropped, commodity futures fell.
"It's the risk-off trade. Everything risky is being sold together," said Gijsels.
Miners were the worst performers, with the sector down 5.1% as BHP Billiton (UK:BLT 1,742, -86.00, -4.71%) (BHP 59.61, -3.41, -5.41%) shares fell 4.3% and Randgold Resources (UK:RRS 5,615, -120.00, -2.09%) (GOLD 80.60, -3.34, -3.98%) shares lost 1.1%.
"Near term, things do look tough for the miners," said strategists at Merrill Lynch as they downgraded Xstrata (UK:XTA 872.00, -61.70, -6.61%) and Rio Tinto (UK:RIO 2,788, -196.50, -6.58%) (RTP 40.04, -3.64, -8.33%) to neutral from buy and Vedanta Resources (UK:VED 2,098, -103.00, -4.68%) and Kazakhmys (UK:KAZ 1,059, -79.00, -6.94%) to underperform from buy.
"Market apprehension over a slowdown in Chinese metals demand has been exacerbated by concerns over contagion from Southern European sovereign debt," they added.
Platinum futures fell $85 an ounce to $1,521.60. That didn't help sentiment towards autos, with BMW (DE:BMW 35.99, -1.36, -3.64%) shares down 2.8% and Daimler (DE:DAI 38.05, -2.78, -6.80%) (DAI 46.70, -3.65, -7.25%) off 5.4%.
Even gold, which has held safe-haven status recently, fell with gold futures down $3.70 at $1,189.40 an ounce.
"It's possible that the rise in gold is stopping as well and that would go well with a thesis of a deflationary world," said Gijsels. "The market is pricing in now that there won't be a quick fix to the crisis. It will be a process, rather than one point where you solve everything," he said.
Banks rallied early on Thursday but couldn't hold onto gains in the afternoon, with BNP Paribas (FR:BNP 45.27, -0.98, -2.12%) shares down 2.2% and UniCredit (IT:UCG 1.71, -0.06, -3.24%) down 3%. BBVA (ES:BBVA 8.42, -0.27, -3.07%) shares fell 2.6%. Read more on Spanish stocks.
Elsewhere, British Airways (UK:BAY 184.60, -8.10, -4.20%) fell 4.1% after an appeals court overturned an injunction against a planned cabin-crew strike. Read more on British Airways.
Of companies updating investors, shares of National Grid (UK:NG. 571.50, -48.50, -7.82%) (NGG 40.99, -3.73, -8.33%) dropped 7.7% after it announced fund-raising plans.
The company will issue shares to raise 3.2 billion pounds ($4.6 billion) net, as results showed fiscal-year net profit jumped to £1.4 billion, up from £944 million last year. Read more on National Grid.
Also lower, shares of SABMiller (UK:SAB 1,907, -128.00, -6.29%) fell 6.2%.
The brewer's net profit for fiscal 2010 rose 1.5% to $1.91 billion. However, management gave a cautious outlook, saying it doesn't expect to see a broader recovery in consumer spending until the second half of the current fiscal year. Read more on SABMiller.
