European banks among biggest losers

Eurostoxx 50: 2,313.84 (-0.71) Frankfurt DAX: 6,035.88 (-0.87) Paris CAC: 3,129.92 (-0.78%)EUROPEAN MARKETS gave up some of their gains yesterday, as weak macro economic data prompted profit taking after sharp gains in the previous session.

Bank stocks, top gainers after the move by central banks to inject liquidity into the financial system, were among the biggest losers as they tested a key technical level.

The STOXX Europe 600 Banks index fell by 1 per cent, while the pan-European FTSEurofirst 300 index of top shares provisionally closed down 0.6 per cent at 976.38 points after jumping 3.6 per cent on Wednesday.

The UK’s FTSE 100 Index dropped 0.3 per cent, France’s CAC 40 Index fell 0.8 per cent and Germany’s DAX Index fell by 0.9 per cent.

BNP Paribas SA and Societe Generale SA, the biggest French lenders, declined by 2 per cent to €28.88 and 3.2 per cent to €17.50 , respectively.

Concerns over the future of the euro continued to overhang markets.

“We are still retaining a cautious outlook, the overhangs are substantial and the route to a more sustainable euro area is complicated,” said Bill Dinning, head of investment strategy at Kames Capital in Edinburgh.

European Union President Herman Van Rompuy said yesterday that “we need to show that the euro is an irreversible project. Markets are not convinced of this”.

“We are witnessing a full-blown confidence crisis,” he said at an event in Brussels, adding: “It is a fact of life and we need to confront that.”

In line with its European peers, the Irish market also gave up some of its gains yesterday, falling back by 37 points or 1.4 per cent, with an element of profit-taking after Wednesday’s highs.

Overall, volumes were light, with brokers noting that activity was stronger on the way up on Wednesday, than on the sell-side yesterday.

There were few winners on the day, with AIB one of the few names which finished the day in the black.

It added 4.6 per cent to close up at € 0.07, while packaging firm Smurfit Kappa gained 3 cent to advance by 0.7 per cent to €4.53.

Petroceltic was particularly strong, and it finished the day up 4 cent, or 95 per cent, at €0.08.

Despite getting a broker upgrade yesterday, Ryanair was largely flat on the day, although one Dublin broker noted that this was a “decent performance”. It closed down 1 cent, or 0.3 per cent, at € 3.79.

CRH was slightly off on the day, and it gave up 20 cent, or 1.4 per cent to slip back to €14.05, although as one broker noted, “it has done well to hang in there at these levels”.

Bank of Ireland was one of the worst performers on the day. It fell back by 1 cent, or 11.8 per cent, to finish down at €0.08.

Independent News Media was also weak on the day, as it lost 2 cent, or 7.4 per cent, to close at €0.20, while Glanbia gave up much of its previous day gains. It fell back by 30 cent, or 6.5 per cent, to finish the day at € 4.35.

Grafton Group was also down. It fell back by 11 cent, or 4.4 per cent to close at € 2.44.

In the US, stocks retreated following the best three-day rally since 2009 for the Standard and Poors 500 Index as banks led losses.

JPMorgan lost 2.5 per cent, Bank of America slipped 1.5 per cent and Citigroup Inc fell 2.4 per cent after each stock rallied more than 7 per cent yesterday.

Financial shares have fallen 21 per cent as a group to lead losses among the 10 main groups in the SP 500 this year amid concern Europe’s debt crisis and tighter regulatory scrutiny will hurt earnings and as low interest rates squeeze the profitability of lending. “We’re muddling along,” Peter Sorrentino, a senior fund manager at Huntington Asset Advisors in Cincinnati, which oversees $14.5 billion of assets, said.

“Until there’s a true resolution for the European situation, the US markets will be somewhat of a prisoner from a psychological perspective. “We’re still going to be range- bound.”

Pfizer held up following the Food and Drug Administration’s clearance for Ranbaxy Laboratories to sell generic copies of the $10.7 billion cholesterol pill Lipitor in the US, threatening Pfizers sales. In early trading, Pfizer rose less than 1 per cent to $20.15 at 9:50 am in New York trading. The stock had gained 15 percent this year before today.

The euro pared gains versus the dollar and yen as concerns increased that European leaders will struggle to resolve the region’s debt crisis even after central banks moved to ease dollar borrowing for banks. The 17-nation currency had the biggest intraday jump yesterday against the dollar in more than a month after six central banks led by the Federal Reserve lowered the premium for banks to borrow dollars overnight.

The pan-European FTSEurofirst 300 index of top shares closed down 0.6 per cent at 976.02 points after jumping 3.6 per cent on Wednesday following the move by the central bank.

The index, which rose above its 38.2 per cent Fibonacci Retracement at 961.45 from its September low to October high in the previous session, was finding resistance at 987.07 – its 23.6 per cent Fibonacci Retracement level.

– (Additional reporting Reuters)