Europe shares close down; Portugal debt concerns

By Joanne Frearson

LONDON (BestGrowthStock) – European shares fell on Wednesday, snapping a three-day rally as investors worried about the economic health of the euro zone’s peripheral countries, with banks falling and miners tracking metal prices lower.

The FTSEurofirst 300 (.FTEU3: ) index of leading European shares closed down 0.6 percent at 1,020.99 points after earlier being up as much as 1,031.39.

“The market is very worried, we are stuck in between a rock and a hard place,” said Philippe Gijsels, senior equity strategist at Fortis Bank in Brussels.

“On the one hand if we get better economic figures investors start worrying about rising interest rates, but if you get bad economic figures investors are worrying we could have some sort of a double dip recession.”

Investor sentiment was also knocked after traders said Portugal’s debt agency IGCP cut its planned T-bill placement to 300 million euros ($420.3 million) from 500 million. The news pushed the cost of insuring debt against default for Portugal, Greece and Spain higher.

Banks featured among the worst performers. Royal Bank of Scotland (RBS.L: ), Banco Santander (SAN.MC: ), BBVA (BBVA.MC: ) and BNP Paribas (BNPP.PA: ) fell 2.1 to 4.2 percent.

Miners retreated from earlier gains as metal prices fell. Anglo American (AAL.L: ), Antofagasta (ANTO.L: ), BHP Billiton (BLT.L: ), Rio Tinto (RIO.L: ) and Xstrata (XTA.L: ) lost 0.8 to 3 percent.

Drugmakers were on the decline. Roche (ROG.VX: ) slipped 0.6 percent after it missed full-year profit forecasts due to disappointing sales of key cancer drugs and gave a lackluster outlook for 2010.

ELECTROLUX SLUMPS

Electrolux (ELUXb.ST: ), the world’s second-biggest home appliances maker, slumped 11.8 percent after it posted lower-than-expected fourth-quarter profit (Read more your timing to make a profit.) and forecast only a modest recovery in demand.

Carmakers were in demand. Daimler (DAIGn.DE: ) rose 1.7 percent on market talk it could release quarterly results that are 50 percent above consensus ahead of schedule.

On the upside, insurer Standard Life (SL.L: ) gained 3.5 percent after the insurer reported above-forecast 2009 sales as a market recovery during the second half helped soften the impact of crisis-hit UK consumers cutting back on savings.

“The positives outweigh the negatives. We expect equity markets to resume their uptrend,” said Tammo Greetfeld, equity strategist at UniCredit Group.

“We think the positive economic backdrop is intact. And earnings so far, such as Nokia (NOK1V.HE: ), and the dividend announcements have been positive. But there are several risk factors, such as Greece’s deficit.”

In economic news, the pace of U.S. job losses in the private sector slowed in January as employers reported the smallest payroll decline in nearly two years while demand for home loans hit a six-week high last week, data showed.

Meanwhile, the U.S. services sector grew slightly in January, according to an industry report.

Across Europe, the FTSE 100 (.FTSE: ) index lost 0.6 percent, Germany’s DAX (.GDAXI: ) dropped 0.7 percent, France’s CAC 40 (.FCHI: ) fell 0.5 percent, Spain’s IBEX 35 (.IBEX: ) shed 2.3 percent and Portugal’s PSI 200 (.PSI20: ) fell 2.8 percent.

($1=.7137 Euro)

Stock Market Today

(Additional reporting by Brian Gorman; Editing by Jon Loades-Carter)

Europe shares close down; Portugal debt concerns