European shares slipped lower amid weak sentiment yesterday, as the French government decision to inject €10.5bn into its banking system lifted financials, but failed to offset the impact of poor earnings in other sectors.
The FTSE Eurofirst 300 ticked 0.5 per cent lower to 923.93, having climbed as high as 944.2 in early trade. In Germany the Xetra Dax fell 1.1 per cent to 4,784.41, but the CAC 40 index in Paris held onto gains, up 0.8 per cent at 3,475.4, bolstered by government moves to improve bank liquidity.
On Monday night France’s finance minister announced that six banks would receive loans from the government as part of the €40bn recapitalisation fund unveiled last week.
Jean-Pierre Lambert at Keefe, Bruyette & Woods said: “The goal is to support lending - banks are committed to increasing their loans to companies and households by 3 to 4 per cent. The banks have been chosen as a function of their key role in the financing of the French economy.”
Crédit Agricole, which will receive €3bn under the scheme, jumped 15.7 per cent to €12.10. BNP Paribas, due to receive €2.55bn, rose 7.5 per cent to €59, and Société Générale, assigned €1.7bn, leapt 10.2 per cent to €48.43.
But other sectors dragged the markets lower amid growing evidence of a global consumer slowdown. Technology stocks suffered after America’s second largest chip-maker, Texas Instruments, posted disappointing third quarter results and warned of a further decline in its fourth quarter revenue.
Rich Templeton, TI Chairman, said: “Revenue was weak because consumers and corporations reduced their spending in this uncertain economy.”
Amid falling confidence, leading telecom equipment maker Ericsson tumbled 8.1 per cent to SKr53.70, while ST Microelectronics, Europe’s largest chipmaker, shed 3.2 per cent to €6.39.
In France, Alcatel-Lucent touched a high of €2.12 after announcing a deal to build a commercial wireless broadband network in Armenia, before reversing its gains to fall 1 per cent to €2.01.
Aeroports De Paris, the owner of Charles de Gaulle, and Orly airports, surged 4.5 per cent to €49.17, on news of an alliance with the Dutch state-owned Schipol Group. The deal, which will see the two airport operators acquiring an 8% stake in each other’s share capital, is expected to generate around €71m in combined revenue and cost savings by 2013. Dexia raised its recommendation for Aeroports De Paris stock to “buy” from “neutral”.
Norsk Hydro, the Norwegian energy and metals producer, plunged 12.3 per cent to NKr27 after reporting worse than expected third quarter profits. CEO Eivind Reiten said results had been hit by “the global financial crisis and uncertainty in world commodity markets”. The company forecast a further weakening over 2008 due to slowing demand in Europe for metal products, particularly from the automotive and building markets which have been punished by turmoil in the credit markets.
Swiss pharmaceutical group Roche dived 5.6 per cent to SFr170.30, following a decline in nine month sales of its antiviral drug Tamiflu, but confirmed plans for a takeover of Genentech, the US biotech group. Competitor Novartis weakened 0.6 per cent to SFr59.
The heaviest loser on the index was Volkswagen, in its third straight session of losses, as it eased back from last week’s record high of €398.84. The German carmaker, Europe’s largest, retreated 12.4 per cent to €242.75, though shares were still 18 per cent higher than at the start of September.
In Moscow the benchmark Micex index gained 4.2 per cent to 652.51, on the first day Russia’s sovereign wealth fund was allowed to buy domestic stocks. Russian shares have lost two thirds in value since their peak in May this year.
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