MW: European shares end lower as financials pressure
BASF to buy Cognis Holding in $3.8 billion deal
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares ended lower Wednesday, declining for the second straight day, with financials under pressure.
The Stoxx Europe 600 index (ST:SXXP 254.44, -2.48, -0.97%) lost 0.84% to end at 254.77.
The index slipped 0.5% on Tuesday, snapping a nine-session winning streak. Disappointing U.S. home sales prompted concern about the economic backdrop and as worries about bank balance sheets in Europe sheets also weighed.
"Risk appetite has certainly taken a knock," said Michael Hewson, strategist at CMC Markets. He said that markets are trying "to figure out whether we are in double dip or recovery mode."
A report out Wednesday didn't help, showing that the rate of growth in the manufacturing sector in the 16-nation euro zone slowed to a four-month low in June.
Financials, leveraged to economic growth, were lower with insurance company Allianz (DE:ALV 83.50, -1.38, -1.63%) down 1.6% and BNP Paribas (FR:BNP 48.29, -1.07, -2.17%) shares down 2.2%.
Of the regional benchmarks, the U.K. FTSE 100 index (UK:UKX 5,179, -68.46, -1.31%) lost 1.3% to 5,178.52, the German DAX index (DX:DAX 6,205, -64.52, -1.03%) declined 1% to 6204.52 and the French CAC-40 index (FR:PX1 3,642, -63.53, -1.71%) fell 1.7% to 3,641.79.
Asian shares declined and U.S. stocks edged down ahead of a key U.S. interest rate decision, due after the close of action on European stock markets.
There was a bit of deal news for investors in Europe, with BASF (DE:BAS 46.90, +0.23, +0.49%) shares up 0.2% after it agreed to buy Cognis Holding in a deal with an enterprise value of 3.1 billion euros ($3.8 billion).
"BASF expects to generate 130 million euros of annual synergies from 2013, or 5% of net sales, which according to our estimates should make the acquisition both value as well as earnings accretive from 2013," said analysts at Commerzbank.
Reporting earnings, shares of U.K.-headquartered electrical products retailer Kesa Electricals (UK:KESA 119.80, +2.40, +2.04%) rose 1.9% after it swung to a fiscal-year profit of 40.7 million pounds as trading conditions stabilized in France and Comet-branded stores grew market share in the U.K. Last year, the firm posted a loss of 111.4 million pounds.
Most oil and gas firms were lower with Royal Dutch Shell (UK:RDSA 1,812, -32.00, -1.74%) shares down 2% and Total (FR:FP 39.25, -0.83, -2.06%) shares down 2% after a judge ruled against an Obama administration moratorium on deepwater drilling -- a decision the market interpreted as spurring protracted legal battles ahead.
