Eurostoxx 50: 2,739.65 (–3.05) Paris CAC: 3,787.88 (–25.09) Frankfurt DAX: 7,349.46 (+4.92)EUROPEAN SHARES fell yesterday, dented by a slew of poor earnings news, contagion fears in the euro zone debt crisis after Spanish and Italian yields rose and worries about the debt stalemate in the US.
Disappointing earnings news dominated the fallers list. UBS lost 2.9 per cent in a volume nearly double its 90-day daily average after the Swiss bank reported weaker-than-expected second-quarter profits and said it was likely to incur “significant restructuring charges”.
“It is very difficult for companies and there are concerns about the scale of restructuring needed for UBS. The market is very skittish,” said Andrea Williams, who manages $2.1 billion in assets for Royal London Asset Management.
Concerns about the euro zone peripheral debt problems hit other banking stocks, with Greek banks falling 6.3 per cent on worries over how the private sector will participate in the plans to rescue Greece.
The FTSEurofirst 300 index closed down 0.3 per cent at 1,100.97 points, but the index recouped some of its earlier losses after Italian yields rose following better-than-expected US consumer confidence in the afternoon.
Italian and Spanish yields were at levels seen before the Greek second bailout agreement amid renewed worries about contagion to debt-laden countries.
In news after the market close, Deutsche Bank cut its exposure by about 70 per cent to five peripheral euro zone countries due to contagion fears over Greece’s debt crisis.
There were also concerns over a possible default or credit rating cut in the US as lawmakers remained in deadlock over a plan to raise the debt ceiling in the country, adding to the negative sentiment.
“There is an overshadow of what is going on in the US and the bond auctions in Spain where yields rose. If yields rise banks will have to pay more ,” Williams said.
STMicroelectronics dropped 9.9 per cent, with volume more than four times its 90-day daily average, after the chip-maker said revenue would fall by as much as 5 per cent in the current quarter. It also forecast the market would slow more than expected. – (Reuters)
