Weaker banking sector results weigh on indices

Eurostoxx 50: 2,926.54 (–25.48) Frankfurt DAX: 7,376.96 (+3.03) Paris CAC: 4,004.87 (–38.26)EUROPEAN STOCKS fell yesterday, as bank earnings disappointed, commodities plunged and a jump in US jobless-benefit claims fuelled concern that the recovery of the world's largest economy may falter.

The Stoxx Europe 600 Index decreased 0.3 per cent to 277.79, completing the longest losing streak in seven weeks. The measure has fallen 2.2 per cent over the past three days after climbing to a two-month high on May 2nd.

“Investors on both sides of the Atlantic are wary of some disappointing results in the banking sector and the selling is dragging down European indexes,” said Michael Scholz, equity strategist at WestLB. “The bears may enter the driving seat if they win today,”

European stocks pared their decline as European Central Bank president Jean-Claude Trichet said inflation risks will be watched “very closely”, signalling the ECB may wait until after June to raise interest rates again.

Fresnillo slid 4.6 per cent to 1,445p for the biggest two-day drop since January 2010.

Essar Energy, the operator of India’s second-largest private refinery, lost 5.2 per cent to 427.6p, an eight- month low.

Royal Dutch Shell, Europe’s biggest oil company, retreated 1.8 per cent to 2,235.5p.

Schroders plummeted 9.2 per cent to 1,700p, the biggest drop in more than two years, after the largest publicly traded UK fund manager published earnings that missed some estimates.

Skanska AB tumbled 4.3 per cent to 122.90 kronor after the Nordic region’s biggest builder said first-quarter order bookings declined.

Actelion, a Swiss biotechnology company, plunged 5.8 per cent to 45.06 francs after shareholders rejected a hedge fund’s proposal for a special investigation into whether the company received expressions of interest from potential acquirers.

Adidas surged 7.3 per cent to €53.50, the highest price since its 1995 initial public offering.

ING, the largest Dutch financial services company, rose 1.6 per cent to €8.93. First-quarter profit increased 12 per cent as earnings at the insurance unit almost quadrupled.

Diageo, the world’s largest distiller, advanced 1.5 per cent to 1,230p. – (Bloomberg)