Banks, sportswear retailer Adidas, clothing retailer Next move lower
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares traded lower on Wednesday, with banks in the red after Allied Irish Banks and UniCredit reported lower profits, and amid continuing nervousness about the economic backdrop.
After Tuesday's flat performance, the Stoxx Europe 600 (ST:SXXP 260.29, -1.77, -0.68%) index lost 0.9% to 259.80.
Banks fell 1.4% overall with Allied Irish Banks (UK:ALBK 0.92, -0.07, -6.77%) (AIB 2.48, -0.21, -7.81%) down 8.4% after its first-half net loss widened to 1.7 billion euros ($2.25 billion). Read more on AIB earnings,
Shares of Standard Chartered (UK:STAN 1,787, -116.00, -6.10%) dropped 6.5%, paring recent gains.
First-half net profit rose 11% to $2.15 billion as lower risk provisions more than offset an increase in costs, but the bank said it remains "somewhat cautious."
Other lenders under pressure included Italy's UniCredit (IT:UCG 2.12, -0.06, -2.64%) , down 3.3% after its second-quarter net profit dropped 70% to €148 million.
Santander (ES:SAN 10.27, -0.11, -1.06%) (STD 13.69, +0.11, +0.81%) shares lost 1.2% as it agreed to buy 318 Royal Bank of Scotland branches for 1.65 billion pounds ($2.63 billion).
There were some banking-sector advancers, with Lloyds Banking Group (UK:LLOY 74.19, +2.27, +3.16%) (LYG 4.70, +0.10, +2.17%) up 2.8% after its earnings topped expectations. Read more on Lloyds.
French bank Societe Generale (FR:GLE 45.69, +0.30, +0.65%) rose 1.1%, as its second-quarter net profit more than tripled to €1.08 billion. Read more on Societe Generale earnings.
The French CAC-40 index (FR:PX1 3,730, -17.11, -0.46%) lost 0.6% to 3,726.14, the German DAX index (DX:DAX 6,296, -12.17, -0.19%) slipped 0.4% to 6,282.53 and the U.K. FTSE 100 index (UK:UKX 5,339, -57.31, -1.06%) fell 1.2% to 5,333.44.
Asian shares ended mostly lower, while U.S. stock futures were pointing to losses on Wall Street with more economic data on tap.
"We're getting data that [are] confirming the idea of a loss of recovery momentum in the economy and that may or may not be confirmed by a poor figure on Friday with nonfarm payrolls," said Mike Lenhoff, chief strategist at brokerage Brewin Dolphin.
"Markets are thin and investors are focusing on the underlying issues such as how solid the recovery is," he added.
Miners, leveraged to economic growth, were under pressure, with Rio Tinto (UK:RIO 3,394, -39.50, -1.15%) (RTP 54.07, -0.53, -0.97%) shares down 1.4% and Xstrata (UK:XTA 1,062, -10.50, -0.98%) shares down 1.2%.
Back with corporate updates and British retailer Next (UK:NXT 2,038, -161.00, -7.32%) dropped 8% after it said that there has been a "noticeable cooling" in retail demand and consumers remain cautious although it expects fiscal-year pre-tax profit to meet guidance.
German sportswear retailer Adidas (DE:ADS 41.70, -0.32, -0.76%) declined 1.1%, paring quarter-to-date gains to 4%. The firm's second-quarter net profit soared to €126 million, from €9 million in the same period a year ago, as it increased its full-year outlook.
"We had an outstanding first half driven by the FIFA World Cup 2010 and the resurgence of the Reebok brand in North America," said Chief Executive Herbert Hainer.
