Europe stocks hit by Italian banks
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LONDON, England (Reuters) -- European stocks ended down on Monday, squeezed by Italian banks with exposure to crisis-hit Parmalat and British retailers after reports of slow sales in the run up to Christmas.
The FTSE Eurotop 300 index of pan-European blue chips skidded 0.43 percent to 943.28 points, below the session high of 947.19 points in holiday-thinned trade.
The narrower DJ Euro Stoxx 50 index shed 0.41 percent to 2,714.09 points.
Investors fled from Italian banks amid worries about their exposure to distressed Italian food group Parmalat and after Goldman Sachs lowered its earnings per share forecasts for the banks.
Capitalia tumbled six percent, Banca Nazionale del Lavoro shed 5.7 percent and San Paolo-IMI lost 3.5 percent.
Parmalat was indicated 63 percent lower at 0.11 euros at the close, from 2.24 euros 10 days ago, as the company considers seeking bankruptcy protection in an Enron-style scandal involving billions of euros of missing money.
"At this stage, the likelihood of Parmalat filing for bankruptcy has substantially increased and we therefore increase fourth quarter provisions for the banks exposed,'' said Goldman Sachs analyst Alessandro Santoni.
Milan was one of Europe's worst-performing bourses with losses of 1.77 percent to 26,739 points
Retailers hit
Investors abandoned British retail stocks following reports of tough pre-Christmas trading conditions.
Marks & Spencer fell 2.3 percent, HMV Group gave up 2.9 percent, Matalan slipped 2.2 percent and WH Smith lost 2.6 percent.
But Britain's FTSE managed to buck the European trend with a 0.27 percent gain to 4,424.0 points, helped by miners on hopes of stronger commodity prices. Xstrata added two percent and Anglo-American was up 1.3 percent.
In New York the Dow Jones industrial average was hovering near break-even, while the technology-heavy Nasdaq Composite Index was down 0.31 percent at 1,945.01.
Strategists said it would be difficult for U.S. stocks to extend recent gains because most are now priced at around fair value, but they reckon Europe still has a lot to offer.
"Earnings are on a reasonably positive trend and valuations are not yet beyond the pale,'' said Michael MacPhee, head of European equities at fund manager Baillie Gifford.
"A lot depends on what happens in the United States and Asia...But if the dollar's fall is controlled then we see a fairly benign outcome for European equities next year.''
Consensus 2004 growth forecasts for European earnings per share are around 15 percent.
"Our feeling is that the market can shrug off the weak dollar as it has done so far this year,'' said Kevin Gardiner, equity strategist at HSBC.
Euro angst
The euro's jump to a new record high of $1.2447 on Monday brought into focus dollar-earning exporters such as French consumer electronics blue-chip Thomson.
Thomson, with 60 percent sales in the United States, skidded 3.9 percent and led the losers on the French bourse, which was down 0.17 percent at 3,496.06 points
But Franco-German Aventis offered investors some relief, up nearly one percent after saying it had filed for U.S. Food and Drug Administration (FDA) approval for its meningitis vaccine Menactra.
French chemicals company Rhodia -- beaten to record lows in recent weeks -- jumped 6.5 percent after confirming it was close to finalizing a refinancing deal with its bankers.
The Swiss SMI lost 0.47 percent to 5,387.8 points and Germany's DAX shed 0.55 percent to 3,876.94.
Automaker Volkswagen undermined the German bourse with losses of 2.5 percent after weekend reports that sales of its new Golf were lagging expectations.
But German Nivea maker Beiersdorf gained two percent on plans to buyback up to 8.4 million of its own shares, while utilities E.ON and RWE rose 1.4 and 0.8 percent respectively.
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Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
