Oils greased; Vodafone rating upped by Morgan Stanley, Goldman Sachs
European shares sagged on Wednesday, with oil majors leading the way lower in the inaugural trading session of the second quarter. The pan-European Dow Jones Stoxx 600 index (ST:SXXP: news , chart , profile ) declined 1% to 174.87, continuing the choppy pattern seen through the week.
"We remain cautious on markets as fundamentals continue to remain weak with no sign of a recovery in the short term," said Stephen Taylor, analyst at Dolmen Securities.
Stocks in Europe dropped 11% during the first quarter. See full story.
down 3.2%, and Royal Dutch Shel down 3.6%, standing out among the worst performers.
Goldman Sachs downgraded BP to sell from neutral on production concerns.
"We expect BP production to decline by roughly 2% per annum after 2010 and this is not reflected, in our view, by a premium valuation vs. the rest of the sector," the broker said.
In energy trading, crude-oil futures fell back toward $48 a barrel amid more gloomy news on the global economy.
In the U.S., the ADP employment index indicated private-sector firms cut 742,000 jobs in March. Meanwhile, the unemployment rate in the 16-nation euro zone rose to 8.5% in February, up from 8.3% the previous month. See full story.
Additionally, worries about the fate of the U.S. automakers were given fresh fuel following a report that President Barack Obama believes a quick bankruptcy is a likely way to reshape ailing automaker General Motors Corp. into a competitive company. See full story.
Markets were looking ahead to the Group of 20 leaders' summit in London on Thursday, although expectations were low for any concrete new steps to support global growth. Read more on G20.
Against this backdrop, the French CAC-40 index (FR:1804546: news , chart , profile ) skidded 1.5% to 2,765.85, while the German DAX 30 index (DX:1876534: news , chart , profile ) lost 1.2% to 4,035.66 and the U.K.'s FTSE 100 index (UK:UKX: news , chart , profile ) fell 0.9% to 3,891.53.
Drug makers in focus
Most drugmakers traded lower, with shares of Sanofi-Aventis giving up 2.7% and GlaxoSmithKline moving down 2.3%.
However, Solvay (BE:SOLB: news , chart , profile ) rose sharply for a second day, its shares up 8% in Brussels. The firm said that it's looking at options for its pharmaceutical operations.
"Conducting this analysis involves various contacts and discussions with third parties," the firm said.
Also on the rise, shares of Vodafone Group jumped 2.9% to 1.26 pounds ($1.81), helping to cushion losses for the Stoxx 600 index.
The wireless telecom giant scored an upgrade from two major brokers.
Goldman Sachs upgraded the firm to buy from neutral and added Vodafone to its conviction list. "The stock is trading near all-time-low multiples on more cautious earnings guidance than peers," the broker noted.
