MW: European shares lower as banks and miners weigh
LONDON (MarketWatch) - European shares dropped in midday action on Wednesday, with a big retreat for banks and miners offsetting an advance for oil producers with a key contract around $60 a barrel.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP 203.19, -2.99, -1.45%) slipped for a third session, down 0.8% to 204.54, with miners and banks skidding.
Shares of mining giant Rio Tinto (RTP 166.20, -15.23, -8.39%) (UK:RIO 2,584, -217.00, -7.75%) dropped close to 7% as a report in the Times of London said the group's $19 billion Chinalco deal will be ditched in favor of a rights issue. Other miners dropped as well, with Chilean copper miner Antofagasta (UK:ANTO 577.00, -21.00, -3.51%) losing 3%.
Analysts at ING said Wednesday that investors have bid up the mining sector too quickly over the past few months.
"Recent outperformance implies a rapid recovery from the worst recession since the 1930s; we think recovery will be more anemic than this," they said.
On a regional level, the U.K. FTSE 100 index (UK:UKX 4,379, -46.40, -1.05%) slipped 0.6% to 4,400.07 as the Bank of England lowered its estimate on U.K. growth. See story.
With data also showing euro-zone industrial output slumping 20% in March, the German DAX 30 index (DX:DAX 4,768, -86.21, -1.78%) fell 0.9% to 4,812.39 and the French CAC-40 index lost 0.4% to 3,218.27.
Banks have also gained sharply in recent weeks on hopes that the worst of the economic contraction is past.
On Wednesday, the sector also gave back some of gains, with Barclays (UK:BARC 248.50, -19.66, -7.32%) (BCS 14.94, -1.28, -7.89%) shares down 6.6%.
Corporate updates were a focus for the financial sector as well.
German insurance giant Allianz (AZ 10.47, +0.31, +3.05%) (DE:ALV 70.63, -5.10, -6.73%) fell 5.2% after it said that its first-quarter net income fell 98% to 29 million euros after it took write-downs and charges and factored in higher claims costs.
ING (NL:INGA 6.98, -0.82, -10.51%) (ING 9.48, -1.14, -10.73%) fell 9.8% as the Dutch bank and insurer posted a worse-than-expected first-quarter net loss of 793 million euros after taking impairment charges on real estate and equity investments. See ING, Allianz story.
Still, Dexia (BE:DEXB 4.30, +0.08, +1.94%) shares rose 2.2% after the bank surprised the market with a better-than-expected profit of 251 million euros. The figure was down 13% from a year ago.
Stronger-than-forecast margins helped catering group Compass (UK:CPG 357.50, +24.75, +7.44%) climb 8% in London. See London Markets.
Oil producers trading higher as light sweet crude futures headed toward $60 a barrel included Royal Dutch Shell (UK:RDSA 1,655, +44.00, +2.73%) (RDS .A 49.63, +1.73, +3.61%) , up 3%, and Total (FR:FP 41.35, +0.46, +1.13%) (TOT 56.38, +1.07, +1.93%) , up 1.7%.
Crude-oil futures rose in New York on Tuesday, briefly topping $60 a barrel, as data showed China's crude imports for April jumped nearly 14% from a year ago.
In electronic trade, crude futures rose 42 cents to $59.27 a barrel.
