Europe’s bourses lower as bank rally fades

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European equity markets ended lower on Thursday as banks and other financial groups fell, overshadowing some better news for the Continent’s retailers.

Adding to the weaker sentiment were losses on Wall Street. The FTSE Eurofirst 300 ended down 1.4 per cent to 1,282.77, Frankfurt’s Xetra Dax shed 1.4 per cent to 6,591.31, the CAC 40 in Paris lost 1.7 per cent to 4,678.05 and London’s FTSE 100 slid 1.5 per cent to 5,766.4.

Banks were a weak factor as Natixis became the latest financial group to announce fourth-quarter losses. The French bank suffered a net loss of €900m after writing down €1.22bn due to turmoil in the credit markets. Natixis shares fell 4.9 per cent to €9.37.

Rival French banks Société Générale and Credit Agricole, which have both recently announced fourth-quarter losses, fell 4.7 per cent to €66.32 and 4.1 per cent to €17.45 respectively.

Banco Popolare in Italy fell 3.8 per cent to €11.71 after Credit Suisse downgraded the stock to ”underperform” from ”neutral” and cut its target price to €14.50 to €17.50.

”We continue to prefer lower risk stocks and hence continue to suggest switching from Banco Popolare into UBI, given the latter’s more attractive valuation and its lower risk profile,” said analyst Andrea Vercellone.

UBI Banca shares, however, also fell – 2.4 per cent to €15.01.

Shares in Swiss bank UBS fell victim to further wriedown rumours, centring on speculation it had sold a huge portfolio of risky mortgages at large discount. Shares fell 4.7 per cent to SFr30.74.

Dutch insurance group Aegon fell 5.7 per cent to €9.25 after reporting a 26 per cent drop in fourth-quarter net profit, hit by currency effects and investment writedowns.

Although the results were in line with market expectations, Chris Hitchings at Keefe, Bruyette & Woods said: “2008 has already seen further deterioration in credit and equity markets, and the challenges this may produce for the group remain significant.”

He added: “We see this as a very cheap share in which risk is less than seems to be feared, and earnings growth over the next few years should substantially outpace current expectations. Meaningful progress in the share price, however, may need calmer credit market conditions.”

Akzo Nobel, the chemicals group, rose 9.1 per cent to €52.19 after it beat expectations with its fourth quarter earnings and announced cash returns. Akzo, which is in the process of integrating its operations with ICI, acquired last year, said it would increase its dividend to €1.80 a share and embark on a €3bn share buyback.

There was plenty of action in the supermarket sector, with two European groups reporting resuts and a third announcing it was on the acquisition trail.

Ahold, the Dutch chain, said it was on the lookout for acquisitions at home and abroad to provide growth opportunities. Its shares gained 3.1 per cent to €9.11.

Delhaize in neighbouring Belgium rose 3.8 per cent to €53.41. It reported lower-than-expected fourth-quarter operating profit as the weak dollar ate into its US-based earnings.

France’s Carrefour, the world’s second largest retailer, reported forecast-beating full-year earnings, and pledged to return €4.5bn to shareholders. Its shares rose 4.1 per cent to 48.34.

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