European shares closed lower yesterday, with banks and oil stocks the major losers and Ericsson falling after disappointing results.
The pan-European FTSEurofirst 300 index of top shares closed down 1.1 per cent at 1,014.72 points. The benchmark index is still up 57 per cent from its lifetime low on March 9, but down 38 per cent since reaching its mid-2007 peak.
“These markets are due for a bout of consolidation, if anyone is looking to book some profits this is as good as time as any,” said Mike Lenhoff, strategist at Brewin Dolphin.
“We might get some rough numbers, but if you look at the whole sweep of newsflow which is being reported then I do not think anyone can say that what we have seen so far has been bad,” he said.
Banks featured among the biggest losers. Credit Suisse was down 3.5 per cent after third-quarter earnings, with analysts pointing to a 16 per cent fall in investment banking revenues from the previous quarter and lower pretax profits and margins at the private banking unit.
HSBC, Banco Santander and BNP Paribas were down 1.1 to two per cent.
Oil stocks fell as crude slipped back 1.1 per cent. BG Group , BP, Royal Dutch Shell and Total were 0.8 to 1.5 per cent lower.
Mobile network gear maker Ericsson lost 6.2 per cent after it reported weaker-than-expected quarterly core earnings and a drop in sales, hit by the global economic downturn.
Chemical stocks were under pressure. Air Liquide was 2.7 per cent lower after sales at the French industrial gases group fell in the third quarter. “Those people who believe that we’re on our way to the moon delude themselves. This is a long hard struggle. We’ve been waiting for weeks for some kind of a pullback after the rally,” said David Buik, senior partner at BGC Partners.
Defensive stocks were in favour, with food producer Nestle up 1.4 per cent.
Vodafone gained 3.4 per cent with traders pointing to a positive read-across from results by U.S. telecoms peer AT&T.
AT&T reported stronger-than-expected third-quarter profit as the popular Apple iPhone helped it land a record number of new wireless customers for the period.
Looking at economic news, the number of U.S. workers filing new claims for unemployment benefits rose more than expected last week, data showed, indicating the labour market remains fragile despite signs of economic revival.
Meanwhile, U.S. home prices fell by a seasonally adjusted 0.3 per cent in August, bringing the 12-month decline to 3.6 per cent, the Federal Housing Finance Agency said.
Across Europe, the FTSE 100 index was down one per cent, Germany’s DAX fell 1.2 per cent and France’s CAC 40 was 1.4 per cent lower.