Banks and oils lead European shares lower

European shares fell yesterday, led lower by banks and energy companies, after US consumer confidence readings proved weaker than expected, but European equities gained 15.9 per cent over the second quarter.

The FTSEurofirst 300 index of top European shares fell 1.1 per cent to 850.17 points. The index rose 15.9 per cent over the second quarter, its best performance since 1999, having hit a lifetime low on March 9.

However, the rally has stalled in recent weeks, as some analysts feel it had gone too far, relative to the evidence of recovery.

"We're at that stage now, where bad news will make a bigger dent than decent news," said Howard Wheeldon, strategist at BGC Partners, in London. "And it doesn't take much. Volumes are so low today, they're just tiny."

US consumer confidence fell in June after two straight months of gains. The Conference Board, an industry group, said yesterday its index of consumer attitudes dropped to 49.3 from 54.8 in May.

BNP Paribas, Deutsche Bank, HSBC and Société Générale fell between 1.7 and 2.9 per cent. Lloyds Banking Group fell 0.9 per cent after announcing 2,100 job cuts. Crude oil prices fell more than three per cent to less than $69.30 a barrel, hurting energy shares.

Total, BP, Royal Dutch Shell, Repsol and StatoilHydro fell between 1.2 and 1.7 per cent.

The price of copper and other metals was also hurt by the fall in consumer confidence. Mining groups Anglo American, Antofagasta, Rio Tinto and Xstrata fell between 1.8 and 2.7 per cent.

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 were down between 1 and 1.7 per cent.

Wall Street was lower as European bourses were closing. The Dow Jones, S&P 500 and Nasdaq Composite were down between 0.8 and 1.4 per cent.