European Stocks Down on U.S. Economic Worries
Major European markets closed lower on Monday, with uncertainty reigning despite positive corporate news scattered across several industries.
London's FTSE-100 erased earlier gains to end lower after opening up slightly on a report that U.K. companies' costs fell more than expected in August. Germany's DAX and France's CAC-40 also closed firmly in the red.
European investors reversed into bearish mood after U.S. stocks, which had opened higher on the back of technology shares, turned to red on weakness in the financial sector.
There were few numbers out during the day to improve sentiment, but Philips Electronics provided a bright spot, saying that it will be able to meet its target of doubling operating profit by 2010 without more layoffs. Shares of the Dutch company closed 3% higher in Amsterdam.
U.K. homebuilder Bovis Homes reported a 10% rise in first-half profit before taxes and said it is comfortable with the current target for full-year earnings, but its shares closed nearly 1% lower in London tracking the market sentiment.
In the financial sector, U.K. bank Barclays saw its shares jump 3% in afternoon trade after the head of its Barclays Capital investment banking arm told investors that profits for the year-to-date are "well ahead" of 2006, with the unit positioned for future growth despite market jitters. Still, shares retreated later and closed 0.4% lower at 585.17 pence.
Shares in Societe Generale, battered Friday because of speculation that it may issue a profit warning, were up 0.4% after a presentation posted Monday on its Web site showed that it kept its financial outlook unchanged. The company closed down 0.9% with the market.
Also in France, Renault CEO Carlos Ghosn told French radio that a merger with Peugeot was out of the cards, sending its shares 1.22% lower in Paris.
Looking to deals, the Qatari Investment Authority may team up with three Italian partners to buy the Nasdaq's spacer 31% stake in the London Stock Exchange, an Italian newspaper reported Sunday.
Economists predict volatile trading will continue ahead of a rate-setting meeting of the Federal Reserve next week.