Last updated: November 7, 2012 5:15 pm

Growth downgrades hit European stocks

European stocks fell heavily on Wednesday as investors, free of the distractions of US elections, turned their attention to domestic matters and some worrying growth downgrades by the European Commission.

Banks, which had led early gains, turned round to be among the weightiest losers after the commission cut its growth forecast for the eurozone for 2012 and 2013, with Germany’s outlook for next year being more than halved from 1.7 per cent to 0.8 per cent.

Deutsche Bank led the losses for financial stocks on the FTSE Eurofirst 300, falling 4.4 per cent to €34.38, and leading Germany’s domestic index, the Xetra Dax, down 2 per cent to 7,232.83.

The benchmark Eurofirst fell 1.4 per cent to 1,099.35.

Among the other financial stocks to feel the strain, UniCredit , the Italian lender, lost 4.3 per cent to €3.41 while Spain’s BBVA lost 3.7 per cent to €6.09.

Bucking the trend was BNP Paribas , the French lender, after it reported rising revenues at its investment bank.

This helped it to a 7.3 per cent gain in third-quarter profit before tax to €732m, beating expectations of €686m. Its shares rose 1.1 per cent to €39.54.

There were heavy losses in the technology sectors as investors feared US-led caution on capital spending.

Chipmakers were lower as analysts’ fourth-quarter projections for Germany’s Infineon Technologies spooked investors. Its shares fell 4.8 per cent to €5.40, while Franco-Italian rival STMicroelectronics was the biggest faller on the pan-European index, down 7 per cent to €4.39.

On the Paris exchange, water utility Veolia Environnement reported a 25 per cent drop in quarterly profit but reaffirmed its annual targets as it announced plans to divest assets and cut its debt. Its shares climbed 4.9 per cent to €7.99 – the biggest gainer on the Eurofirst.

Alstom , meanwhile, rose 1.3 per cent to €27.98 after its first-half earnings rose 11 per cent, while strong order intake prompted the engineering group to maintain its long-term guidance. The Paris CAC 40 index ended 2 per cent lower at 3,409.59.

The sole gainer on the German Dax was BMW . Shares in the carmaker rose 1.5 per cent to €65.02 after its results, published in the previous session, prompted a number of upgrades. Kepler raised its price target to €72 from €65, maintaining a buy rating, while Société Générale raised its price target to €72 from €70, keeping its buy rating also.

SocGen analyst Arndt Ellinghorst said: “BMW remains the most consistent provider of quality earnings and cash flow in the automotive sector.”

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