European shares slip

European shares closed sharply lower yesterday, pressured by banking and commodity stocks, as a poor corporate outlook worldwide and a flurry of grim economic data raised concerns about a deep global recession.

The FTSEurofirst 300 index of top European shares ended 4.2 per cent lower at 883.56 points, after rising 0.9 per cent on Monday. The index has lost 41 per cent this year, hammered by the credit crisis and resulting economic slowdown.

The banking sector took the most points off the index, with Lloyds falling 9.1 per cent, HBOS slipping 7.9 per cent, UBS falling 8.4 per cent and HSBC shedding 5.3 per cent.

Commodity stocks were also under pressure, tracking a sharp decline in crude and metals prices.

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 were down between 3.6 and 5.3 per cent.

"There is no surprise that investors continue to be spooked by a wave of disappointing economic data, and forecasts in terms of economic growth around the world continue to come down," Henk Potts, equity strategist at Barclays Stockbrokers, said.

"In the short term, you have to believe that equity markets will continue to be under pressure. Weak economic readings from China, Japan and Britain and a grim corporate outlook lifted fears of a prolonged recession.

Chinese import growth slowed in October, while in Japan, exports fell nearly 10 per cent in the first 20 days of October and corporate bankruptcies jumped 13.4 per cent year-on-year.