European shares at new six-year low on pharma, telecoms

European shares ended lower for the fourth straight session yesterday as defensive sectors such as telecoms and pharma slipped, outpacing a broadly positive day for banks, which gained on a UK asset bailout plan.

The FTSEurofirst 300 index of top European shares closed 0.5 per cent lower at 716.15 points, the fourth day in a row that the market hit a six-year closing low. It has fallen 14 per cent so far this year after plunging 45 per cent in 2008.

The STOXX 600, a broader index of European shares, was down 0.3 per cent, with pharmaceuticals, utilities and mobile telecommunications sectors being the biggest decliners. Among pharma shares, Roche was down three per cent,GlaxoSmithKline declined 1.1 per cent and Novartis was down 1.5 per cent.

European telecom shares were broadly lower, with BT Group down 1.4 per cent, Swisscom falling 1.8 per cent and France Telecom declining 1.5 per cent.

"There is no clear sign of optimism in the short term. We are quite convinced that the stress in the markets will last for long and there will still be some profit warnings," said Romain Boscher, head of equity management at Groupama Asset Management.

"We are strongly underweight on banks because their exposure to several kind of risks are very high."

Financial stocks were mixed, although UK banks were generally higher on news that Britain's Treasury and top banks were hammering out final details of a plan to limit lenders' losses on about 500 billion pounds of risky assets. Barclays rose 7.5 per cent, Lloyds gained 6.5 per cent and Royal Bank of Scotland added 4.5 per cent, but AXA fell 3.8 per cent, Swedbank lost 5.5 per cent and KBC Groep fell 4.3 per cent.

Across Europe, the FTSE 100 index rose 0.9 per cent, Germany's DAX fell 1.3 per cent and France's CAC 40 was down 0.4 per cent.

A raft of economic data painted a bleak picture and analysts said that European shares will continue to be under pressure in the near term.