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European Stocks Lower on Credit Fears, U.S. Data
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European stocks closed lower Tuesday on renewed concerns about the credit crunch and as U.S. consumer confidence fell sharply in September to its lowest level in nearly two years.
The pace of U.S. existing home sales also fell in August, to a 5.5 million-unit annual rate.
The London FTSE-100 [FTIND
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], Paris CAC-40 [CAC40-FR
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] and Frankfurt DAX [DAX-XE
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] were all firmly lower, as was the FTSE CNBC Global 300 [FCNBCG
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].
Banks were again at the top of the losing sectors, with a BBC report saying that beleaguered British Northern Rock is likely to withhold paying an interim dividend. Northern Rock shares closed more than 5% lower.
The report was not confirmed before the market closed, but economists said any bit of negative rumor was likely to push the shares down.
"The market is very nervous regarding Northern Rock, full stop," David Jones, chief market strategist at CMC Markets, told "European Closing Bell."
French-Belgian bank Fortis saw a 4.3% drop in its shares after it launched a rights issue to finance part of the acquisition of Dutch ABN AMRO.
Oil Sector Swings
In other corporate news, shares of BP fell 2.8% as Chief Executive Tony Hayward told staff he is planning to streamline operations at the oil major and warned that third-quarter revenues would be "dreadful," according to a Financial Times report.
"I think we may well see more downside to BP," Jones said.
Also in the oil sector, Austrian oil and gas group OMV upped the ante in its battle to take over Hungary's MOL, telling MOL shareholders it would offer $20 billion if MOL's board agrees to negotiate.
OMV wants to become the biggest oil company in central Europe so that it can fend off possible hostile bids from larger rivals. Its shares closed nearly 5% lower.
In other corporate news, London-listed Arcelor Mittal is planning to crank up its steel production by pumping in an additional $35 billion into its global sites, company Chief Executive Lakshmi Mittal told the Financial Times. Arcelor Mittal's shares closed 1.6% down with the market sentiment.
And the London Stock Exchange delivered a bullish trading statement saying it would report very strong first-half results and was very close to completing its tie up with Borsa Italiana. Shares of the LSE were 3% lower.
In economic news, credit market conditions tightened, sending euro money market overnight rates to a three week high as worries about the economic cost of the credit crunch spooked lenders.
The credit problems have taken their toll on German business sentiment with a fall in the influential Ifo business climate index to 104.2 in September from 105.8 in August, below the 105.0 expected by economists.
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Data is a real-time snapshot *Data is delayed at least 15 minutes
