HBOS, IntesaSanpaolo downgraded; Deutsche Post slips on UPS update
By Sarah Turner, MarketWatch
Last update: 6:48 a.m. EDT April 9, 2008
LONDON (MarketWatch) -- Banks led the way as European shares traded lower Wednesday, with both the sector and the broader market weakening for a second session against a background of ongoing worries about the strength of the global economy.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP: news, chart, profile) fell 0.6% to 316.74, with 12 out of 15 sectors trading in the red.
The German DAX 30 index (DX:1876534: news, chart, profile) declined 0.7% to 6,722.30 and the French CAC-40 index (FR:1804546: news, chart, profile) dropped 0.7% to 4,876.39, while the U.K.'s FTSE 100 index (UK:UKX: news, chart, profile) dipped 0.3% to 5,972.10.
U.S. stocks ended Tuesday's session on a downbeat note after quarterly earnings updates left investors disenchanted. See Tuesday's Market Snapshot.
United Parcel Service (UPS) cut its first-quarter profit range, with the package-delivery giant stung by the same economic headwinds affecting industriesfrom airlines and automakers to banks and retailers. See full story.
Shares of Germany's Deutsche Post (DE:555200: news, chart, profile) , which competes against UPS, fell 1.9% on Wednesday morning, while Dutch logistics firm TNT (NL:00906: news, chart, profile) saw its shares retreat 2.4%.
"Earnings reports from the States were a bit disappointing, and the Federal Reserve minutes did a bit of damage," said Bernard McAlinden, strategist at NCB Stockbrokers in Dublin, speaking about Wednesday's market action in Europe.
"Europe to some degree still tracks sentiment from the U.S., especially on a day-to-day basis," he noted.
Banks lower
The weakness in European banks came a day after the International Monetary Fund placed a value of about $945 billion on potential global losses for the financial sector growing out of the recent credit crisis. See story.
Broker downgrades on some lenders also hurt the midweek sentiment.
U.K. mortgage lender HBOS (UK:HBOS: news, chart, profile) led the sector lower, its shares tallying losses of 3.6%.
The bank was downgraded to underperform from neutral at Credit Suisse, which cited a weak outlook statement from HBOS and a sharp increase in the interest rate at which banks lend to each other.
"In an environment of a weakening housing and mortgage market, and the many different ways that it affects HBOS, we do not see how the shares can sustain any significant recovery for now," the broker added.
A downgrade also pressured shares of Italian lender IntesaSanpaolo (IT:ISP: news, chart, profile) , down 1.2% in Milan, as J.P. Morgan cut its stance to neutral from overweight.
"We still believe that IntesaSanpaolo is a high-quality stock with good earnings growth. but we believe that these good features are now priced in," the broker said.
There were also a few broker moves Wednesday in the brewing sector.
Shares of SABMiller (UK:SAB: news, chart, profile) fell 1.6% in London, retreating after Citigroup downgraded the brewer to hold from buy, saying input-cost pressures will hit margins by about 1.5 percentage points in 2009.
However, shares of Carlsberg rose 2.5%.
Morgan Stanley upgraded the Copenhagen brewer to overweight from equal weight, saying Carlsberg and InBev "look best placed to benefit from a more robust performance of the brewers than many expect."
Shares of Inbev (BE:000558253: news, chart, profile) rose 1.1%.
Sacyr-Vallehermoso, oils up
Also higher, shares of Spanish construction firm Sacyr-Vallehermoso (ES:018287021: news, chart, profile) added 2.5%.
The company decided to sell its entire 33% stake in Eiffage (FR:013045: news, chart, profile) , its French counterpart, to French investors for 1.95 billion euros ($3.1 billion), or 63 euros per share. Eiffage shares rose 0.7% to 60.24 euros.
Oil companies were also performing strongly on Wednesday as crude prices firmed atop $108 a barrel in electronic trading.
Shares in BP (BP) (UK:BP: news, chart, profile) advanced 1.6% in London, while Eni (E: 72.53, +1.37, +1.9%) (IT:ENI: news, chart, profile) climbed 1.3% in Milan.
Sarah Turner is a markets reporter for MarketWatch in London.
