European stocks stumble on Swiss Life, Telenor

European stocks slipped yesterday as Norway's Telenor floundered after the government sold shares in the telecoms group and insurer Swiss Life fell on plans to tap shareholders for cash.

Swiss Life tumbled 9.9 per cent on news it wants to raise 1.15 billion Swiss francs through a share and bond issue and that it would pay no dividend after pulling the planned sale of its private bank, Banca del Gottardo.

That infected sentiment for other insurers and the sector fell 0.8 per cent as Swiss Re, Germany's Allianz, France's AXA and Dutch-listed Aegon all lost between one and two per cent.

The FTSE Eurotop 300 index of pan-European blue chips ended down 0.1 per cent at 984.3 points and the narrower DJ Euro Stoxx 50 index shed 0.2 per cent to 2,791.6.

Amid moderate volume, the ratio of losers to gainers in the Eurotop was around three to two.

European blue-chips are up around two per cent after reaching year lows last week in the wake of the bombings in Madrid and worries about the US-led global economic recovery.

Earlier yesterday, global security fears resurfaced and weighed on stocks after British anti-terror police said they had arrested a number of suspects in dawn raids.

"The market has not yet come to terms with the economic cost of global security fears," a fund manager said. However, economic growth fears could be laid to rest on Friday with the release of March US non-farm payrolls - key to the long-term health of the US economy.

"I expect to see better payrolls data and that should put questions about sustainable growth on a back-burner," said Klaus Wiener, chief strategist at AMB Generali Finanz. "But it could spell trouble for equities if the data disappoint again."

On Wall Street, the Dow Jones industrial average and the tech-laden Nasdaq Composite were flat around 10,331.4 points and 1,991.7 points respectively.

Markets will also watch tomorrow's survey of manufacturers compiled by the US Institute of Supply Management.

In Europe, economists expect the European Central Bank to keep benchmark interest rates at two per cent.

Some think the chances of a cut have risen since last week. But strategists say a cut will give equities only a brief boost as lower rates cannot overcome the structural weakness of consumer demand on Continental Europe.

Across Europe, London's FTSE was up 0.1 per cent, Paris's CAC and Zurich's SMI lost 0.4 per cent each, while Frankfurt's DAX fell 0.2 per cent.

Telecom stocks also came under fire on dealer talk that Norway's government - having sold a near 10 per cent, $1.2 billion stake in Telenor - would sell more as part of a plan to reduce state ownership.