European markets fall, led by banks and airlines - European commentary

19:17 GMT

Jul 2008

(RTTNews) - The European markets fell on Friday, as financial stocks slipped after Goldman Sachs said European banks may need to raise as much as $141 billion to keep their financial ratios at current levels and near record high crude oil prices battered airline stocks.

Trading was subdued, as the U.S. financial markets were closed for the Independence Day holiday.

Crude for August delivery fell $1.19 to $144.10 a barrel in electronic trading on the New York Mercantile Exchange, by the time the European markets closed, on hopes that tensions surrounding Iran’s nuclear program could ease. There was no floor trading on the NYMEX. The contract hit a record trading high at $145.85 a barrel yesterday.

The FTSEurofirst 300 index of pan-European blue chips closed 1.27% lower at 1,163.11 points, while the narrower DJ Stoxx 50 index fell 1.26% to 2,837.58 points.

Around Europe, the U.K.’s FTSE 100 index fell 1.16% to 5,412.80. Royal Bank of Scotland, Barclays, British Airways, Friends Provident, Anglo American, Antofagasta, Marks & Spencer and Wolseley were among the major losers, while Tesco, Next, Rio Tinto, Morrison Supermarkets and ITV were among the top gainers.

France’s CAC 40 index dropped 1.80% to 4,266.00. BNP Paribas, Credit Agricole, Societe Generale, Air France-KLM, LVMH, Michelin, Suez, Veolia and EADS were among the notable losers.

Germany’s DAX index slipped 1.28% to 6,272.21. Deutsche Bank, Commerzbank, Lufthansa, Continental, Linde, RWE and Siemens were among the major losers.

Banco Santander led financial stocks lower, falling 4.3%, after Goldman Sachs downgraded the shares of Spain’s largest bank to ”neutral” from ”buy” and said European banks may need to raise as much as $141 billion.

Royal Bank of Scotland, Britain’s second largest bank, slipped 3.2%, while BNP Paribas, France’s biggest lender, declined 2.8% and Commerzbank, Germany’s second largest bank, lost 4.3%.

Bradford & Bingley tumbled 18% after U.S. investor TPG Capital withdrew a 179 million-pound ($354 million) offer for buying a 23% stake in the British mortgage lender.

Oil sensitive airline stocks fell, as crude oil prices traded above $144 a barrel. Air France-KLM, Europe’s largest airline, slid 1.7%, while Lufthansa, the second largest, declined 1.5% and British Airways, the third largest, dropped 5.7%.

Similarly, Michelin, the world’s biggest tiremaker, fell 1.2% and Continental, the fourth biggest, lost 5.1%.

Marks & Spencer, Britain’s biggest clothing retailer, lost 3.8% after Citigroup downgraded the stock to ‘’sell” from ”buy” and slashed its share-price estimate 54% to 205 pence. The company’s shares had tumbled 24.5% on Wednesday after it ousted the head of its food division, Steve Esom, and said the worst revenue in three years will cause profit to slump.

On the other hand, Infineon, Europe’s second biggest chipmaker, rose 2% on speculation that the company may be a takeover target.

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