European shares slipped yesterday from a 15-month closing high as banks fell after worse-than-expected earnings from Bank of America and Morgan Stanley and miners dropped on China concerns.
The FTSEurofirst 300 index of top European shares finished 1.5 per cent lower at 1,052.53 points, having touched a two-week low at 1,048.96 in intra-day trade. The fall was its biggest one-day percentage drop in 1-1/2 months.
The index hit its highest closing level since October 3, 2008 in the previous session.Financial shares were on the back foot after Bank of America posted a wider-than-expected quarterly loss, while Morgan Stanley's quarterly profit fell short of analysts' expectations.
Standard Chartered, HSBC, Barclays, Lloyds, BNP Paribas, Société Générale, Credit Agricole and Commerzbank fell 1 to 3.6 per cent. Greek banks extended recent falls, on continued worries about the country's economic position. Bank of Piraeus and National Bank of Greece fell 6.9 and 5.5 per cent respectively.
Investor sentiment was also dented by data showing US housing starts unexpectedly fell in December, signalling a bumpy ride for the country's economic recovery. "The Bank of America's results, more than anything else, and also the poor housing data are the things investors have been focusing on," said Angus Campbell, head of sales at Capital Spreads.
Across Europe, the FTSE 100 index, Germany's DAX and France's CAC 40 were down between 1.7 and 2.1 per cent. Miners also came under pressure, tracking lower metals prices on worries over tightening monetary policy in China, a top commodity consumer. Copper, aluminium, nickel and zinc prices slipped 2.6 to four per cent.
Shares of Anglo American, Antofagasta, Eurasian Natural Resources and Vedanta Resources shed 4.1 to 6.3 per cent. The Chinese authorities ordered some big banks to curb lending for the rest of January, intensifying their efforts to prevent the world's third-largest economy from overheating.
"On the whole the market has also been influenced by what has been happening in China and it will be interesting to see how things pan out with Chinese GDP numbers overnight," Mr Campbell said. Investors will keenly watch fourth-quarter gross domestic product from China, due for release today.