traveling online: European stocks fall to lowest in almost 4 weeks

Wednesday, February 28, 2007

European stocks fall to lowest in almost 4 weeks

Reuters

Published: February 27, 2007

LONDON: European stocks tumbled to their lowest in almost four weeks on Tuesday, dragged lower by heavyweight miners after the main Chinese index took a beating and by banking shares.

Among major movers, Standard Chartered sank following its results, while EADS gained after its board agreed on a restructuring plan for its Airbus unit.

"We're seeing a little bit of correction, a little bit of profit taking, but it's nothing serious. You've seen some excellent results in the last few days," said Thomas Muehlberger, fund manager at Bayern Invest in Munich.

"A lot of people are concerned about the situation in China. The feeling is we'll have very high volatility in that market."

The FTSEurofirst 300 index of leading European shares fell as much as 1.5 percent to 1,529.74 points, its lowest level since Feb. 1.

The move followed a lower Wall Street session as crude oil hovered above $61 a barrel as tensions continued over Iran's nuclear ambitions. The stand-off weighed on investor risk aversion, helping send the yen sharply higher against the dollar and euro.

In China, the Shanghai Composite fell nearly 9 percent, its biggest drop in a decade, as profit-taking by local funds snowballed ahead of a parliamentary session next week.

Across Europe, Britain's FTSE 100 slipped 0.9 percent, while Germany's DAX and France's CAC 40 both fell 1 percent.

MINERS TUMBLE

Mining stocks pulled the European market lower, with BHP Billiton down 3.5 percent and Rio Tinto down 3.4 percent, spooked by worries over Chinese growth and higher South African taxes.

In the banking sector, Barclays fell 2.8 percent while Deutsche Bank slid 1.5 percent. Standard Chartered fell 3.3 percent after its earnings broadly matched analysts' forecasts.

EADS proved a rare bright spot, adding 1.1 percent after its board approved a shake-up for Airbus which is expected to include job cuts and factory sales as it tries to stay competitive with its archrival Boeing.

Among other companies reporting earnings, Spain's Repsol fell 1.6 percent after its adjusted net profit dropped, while Air Liquide slid 1.8 percent despite posting a higher-than-expected result.

Britain's GKN jumped 10 percent to its highest level since May 2002 after the engineer posted annual results at the top end of forecasts and said the outlook for major markets was positive.

"GKN's resilient 2006 augurs well for the future," UBS said in a broker note, adding the results suggest the company's restructuring is delivering ahead of plan.