European shares down on Nokia, pharma stocks

European shares fell yesterday, led lower by Nokia after the world's biggest maker of mobile phones failed to impress investors with its outlook, dragging down other technology and telecom stocks.

The pan-European FTSEurofirst 300 index closed down 0.6 per cent at 1,295.32 points. The index had started the day in positive territory, but turned by midday, mainly on Nokia's results and outlook.

"It all started with Nokia. Nokia's sentiment leads the way in Europe. And this also has an impact on telecoms stocks," said Christian Stocker, equity strategist at UniCredit Global Research.

Nokia shares fell 13.6 per cent after it said it expects the mobile market to fall in euro terms this year. The DJ Stoxx European technology sector index fell 6.3 per cent and the DJ Stoxx Telecom index was down 1.7 per cent.

Pharmaceutical shares were the second-weakest sector in Europe, and the European pharmaceuticals sector was down 1.5 per cent mainly on disappointing results from Pfizer and Roche, which also weighed on AstraZeneca shares.

Banking shares bucked the trend and gained ground, helped by expectations for a mortgage rescue plan by British authorities. British lender Alliance & Leicester rose 1.4 per cent and HBOS gained two per cent.

Royal Bank of Scotland was the standout loser among UK banks, falling 2.4 per cent, as traders cited market speculation about a possible rights issue. RBS was not immediately available for comment.

Elsewhere Société Générale added 4.3 per cent as traders cited renewed talk that rival Credit Agricole could launch a takeover bid. Credit Agricole officials were not immediately available for comment, and a spokesman of Société Générale declined to comment.

An upgrade from Goldman Sachs also helped the stock.

And across the Atlantic, Merrill Lynch & Co Inc rose 1.3 per cent after the investment bank reported write-downs of $6.5 billion in sub-prime mortgages and other risky debt, which met analysts' expectations.

Analysts now await Citigroup's first quarter results today, due at 1030 GMT, according to Reuters data.