European stocks dip for fourth day

European stocks were down again for a fourth straight session yesterday, with insurers among the hardest hit, as a fresh rise in the yen against the dollar fuelled new worries.

Concern that investors were closing down bets on risky assets they had financed by borrowing in yen has pounded equity markets worldwide this week. Tuesday's plunge in Chinese stocks and the Iranian nuclear dispute have also bedevilled sentiment.

"The yen is testing 117 against the dollar again. This is prompting another spat of selling. Everyone remains very edgy. There is no sign of bargain hunting yet," a trader said.

After this week's rout wiped out all market gains for this year, investors awaited the publication of a US consumer sentiment report to decide whether or not to come back to a market that is down 5.3 per cent since the start of the week.

By 1227 GMT, the pan-European FTSEurofirst 300 index was down 0.8 per cent at 1,457.61, intraday levels last seen in mid-December.

"Where next? It is likely that markets will remain choppy. The amount of leverage that has been deployed is a potential source of financial distress for some market participants and could yet be a catalyst for further volatility," State Street Global Markets strategists said in a note on global equities.

"The squalls in markets this week are not a new, new paradigm. Rather, the spike in volatility and the return of a measure of fear is simply the resumption of normal service. Markets, like human beings, do not behave perfectly all the time. That is what makes both fascinating."

Around European exchanges, London's FTSE 100 eased 0.2 per cent, while Paris's CAC-40 and Frankfurt's DAX both declined around 0.8 per cent.

In New York, US stock index futures fell sharply, pointing to a weaker market open as the risk aversion that hobbled equities this week remained at the forefront of investors' concerns.

Back in Europe, insurers were again some of the region's biggest losers amid continuing worries about their exposure to the global equity market. ING shares fell 2.1 per cent.

Basic resources also weighed on the overall market, with BHP Billiton and Rio Tinto both off 0.7 per cent, while Antofagasta shed one per cent and Xstrata 1.5 per cent as copper, aluminium and nickel prices fell.

In a thin day for European results, Swiss-based staffing firm Adecco reported forecast-beating 2006 net profit due to a year-end tax break, but its shares fell 4.7 per cent on worries about growth.

Merger news continued to bubble away, with Britain's Bodycote leaping 20.5 per cent to 311 pence after saying it had rejected Switzerland's Sulzer cash offer of 325 pence per share.