Further losses as bank tests fail to ease worries

Eurostoxx 50: 2,627.45 (-47.93) Frankfurt DAX: 7,121.42 (-98.70) Paris CAC: 3,650.71 (-75.88): EUROPEAN STOCKS dropped for a third day yesterday, extending the decline since this year's high to almost 10 per cent, after results from bank stress tests failed to allay concern that the region's sovereign debt crisis will spread.

Atlas Copco and Kuehne and Nagel International slid more than 4 per cent after reporting earnings that missed analyst estimates.

National benchmark indexes declined in every western European market. France’s CAC 40 slid 2 per cent, the UK’s FTSE 100 lost 1.3 per cent and Germany’s DAX retreated 1.6 per cent. Italy’s FTSE MIB tumbled 3.1 per cent to the lowest in two years.

Deutsche Bank, Germany’s biggest lender, slid 3.8 per cent to €35.74 while Italy’s UniCredit sank 6.5 per cent to €1.13. Barclays, the UK’s second-largest bank by assets, lost 6.9 per cent to 208 pence.

Atlas Copco tumbled 7.9 per cent to 150 kroner after the world’s largest maker of air compressors reported second-quarter net income of 2.98 billion kroner. That missed the analyst average estimate of 3.2 billion kroner, according to a Bloomberg survey.

Kuehne and Nagel lost 4.1 per cent to 113.20 Swiss francs after the 120-year-old shipping company reported second-quarter net income of 158 million francs, trailing the average analyst estimate of 163 million francs.

Parmalat Holcim slipped 3.8 per cent to 53.85 francs after chief executive officer Markus Akermann warned profitability may suffer “some pressure” as the cost of raw materials rose in local currencies.

Parmalat dropped 7.2 per cent to €2 as the company’s weighting on the FTSE MIB Index shrank at the close of trading on July 15th.

A gauge of auto-industry shares had one of the biggest drops among industry groups in the Stoxx 600. Daimler, the world’s second-largest maker of luxury cars, slid 3.3 per cent to €51.50.

Safran retreated 4.8 per cent to €27.21 after Deutsche Bank lowered its recommendation for the defence company to “hold” from “buy”. JPMorgan Chase last week removed the shares from its European “analyst focus” list.

Separately, analysts at Nomura Holdings said the Italian dairy company may reduce its full-year earnings forecast when it reports first-half results on July 28th. – (Bloomberg)