European shares sank yesterday afternoon after two of the region's key central banks failed to follow the US Federal Reserve's lead and cut interest rates as investors fret about slowing economies.
"After the US elections and Fed euphoria, we are going back to basics and wondering why rates are being cut," said David Thwaites, a European strategist at BNP Paribas.
"You only have to look at Cisco's outlook and retailers in the US coming out with their October sales and that is a good excuse to backtrack a bit."
Dutch insurer Aegon sank 6.6 per cent to 13.30 euros after reporting a 28 per cent slide in quarterly net profit and slightly lowered its already gloomy outlook for the full year.
Aegon's news sent a chill throughout the insurance sector, with French peer Axa down 7.9 per cent at E13.89.
Technology shares were hardest hit, mirroring an opening slide in the Nasdaq Composite on Wall Street due to disappointment over a cautious outlook from tech bellwether Cisco Systems.
UK telecoms operator BT Group shone, however, its shares rising 6.7 per cent to 201 pence after reporting strong second-quarter profits and increasing its dividend.
By 1441 GMT, the FTSE Eurotop 300 index was down 1.26 per cent at 901 points, while the narrower DJ Euro Stoxx 50 index shed 2.5 per cent to 2,514 points.
The Eurotop 300 has gained over 16 per cent since hitting a five-and-a-half-year low on October 10.
On Wall Street, the Dow Jones industrial average fell 0.8 per cent to 8,692 points, while the Nasdaq Composite dropped 1.7 per cent.
On Wednesday, the US Federal Reserve slashed its key interest rate by half a per centage point and signaled it planned no more cuts any time soon.
The news triggered a late rally on Wall Street. The cut also helped send shares in British glass-maker Pilkington up 7.8 per cent to 65 pence as it boosted confidence in the company's US housing and auto glass business prospects.
However, the Bank of England, the European Central Bank and the Swiss National Bank all left their interest rates unchanged on Thursday.
"I thought the Bank of England might cut, but I am not surprised with the ECB. The market's hope for a coordinated cut was tempting fate and in the event it is disappointed. It's a good excuse to take profit," BNP's Thwaites said. (Reuters)
Shares in Securitas AB, the world's biggest security services company, sank 13.8 per cent to 112 Swedish crowns after reporting an expected surge in third-quarter pre-tax profits, but said much of the sales growth was due to temporary factors that would not recur.