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European Shares Close Lower, Banks Dip

Reuters
Wednesday, 21 Nov 2007 | 12:40 PM ET

European shares fell sharply on Wednesday as fresh concern about the fallout of a credit crunch hit banks, while the record high euro dragged down shares of major exporters.

The FTSEurofirst 300 index of top European shares ended at an unofficial close of 1,445.18 points, showing a 2.35 percent fall on the day.

Banks were the biggest declining sector, driven by a sharp fall in Societe Generale which shed about 7 percent in its largest one-day fall in five years after a broker downgrade.

The FTSEurofirst has fallen 2.6 percent so far this year, compared with a 15-percent gain this time in 2006, on persistent concern over banks' exposure to products linked to the U.S. mortgage market and sky-high lending rates.

"There are concerns about many of the banks ... and what exposure they've got to some of these things that many people still don't fully understand, what the size of that exposure is and what the size of the write-offs could be," said Andrea Williams, head of European equities at Royal London Asset Management.

In other European markets, London's FTSE 100 index fell 2.5 percent, while Frankfurt's DAX dropped 1.5 percent and Paris' CAC 40 lost 2.3 percent.

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