Europe shares hit 1-week closing low on Goldman, ash

By Atul Prakash

LONDON (BestGrowthStock) – European equities fell to their lowest close in more than a week on Monday, with banks falling on Friday’s fraud charges against Goldman Sachs (GS.N: ) and airlines slipping on a fifth day of cancellations due to volcanic ash.

The market pared losses in the afternoon session after Citigroup (C.N: ) posted a $4.43 billion first-quarter profit (Read more your timing to make a profit.) and a gauge of the U.S. economy’s prospects rose more strongly than expected to a record high.

The FTSEurofirst 300 (.FTEU3: ) index of top European shares finished 0.7 percent lower at 1,088.04 points, the lowest close since April 8. The index is still up 68 percent since hitting a record low in March last year.

Banks were among the top losers, with the STOXX Europe 600 banking index (.SX7P: ) falling 0.9 percent. HSBC (HSBA.L: ), Barclays (BARC.L: ), Societe Generale (SOGN.PA: ), Credit Agricole (CAGR.PA: ), Natixis (CNAT.PA: ) and UBS (UBSN.VX: ) fell 0.8 percent to 2.2 percent.

“This Goldman Sachs affair is certainly something that is keeping investors a bit wary because it could become a key for more stringent regulations. The market is also weak probably because the Greek problem is clearly not solved yet,” said Luc Van Hecka, chief economist at KBC Securities.

“But counter-forces are at work as well. Most of the companies that are publishing earnings have come out with quite strong figures. That’s certainly positive.”

The U.S. Securities and Exchange Commission on Friday charged Goldman with fraud over its handling of a debt product tied to subprime mortgages. Goldman has denied the charges.

Greek bank shares (.FTATBNK: ) fell 2.6 percent on worries over the impact of widening yield spreads and austerity measures on the weakening economy. National Bank (NBGr.AT: ), EFG Eurobank (EFGr.AT: ) and Bank of Piraeus (BOPr.AT: ) fell 3.2 to 4 percent.

European and International Monetary Fund officials will discuss the possibility of more austerity measures for Greece, a top EU official was quoted as saying, as a delay in talks put pressure on Greek assets.


Technicals have also deteriorated, chartists said.

“Last week’s retreat coincides with the appearance of bearish divergence on the momentum indicators,” said Bill McNamara, technical analyst at Charles Stanley.

“The next area of possible support is likely to be the intermediate peak from January, at 1,069,” he said, referring to the FTSEurofirst 300 index.

Appetite for risky assets fell, with the VDAX-NEW volatility index (.V1XI: ) hitting a six-week peak. The higher the index, which is based on sell and buy options on Frankfurt’s top-30 stocks (0#.GDAXI: ), the lower the market’s desire to take risk.

Miners came under pressure as metal prices fell on risk aversion. BHP Billiton (BLT.L: ), Anglo American (AAL.L: ), Antofagasta (ANTO.L: ), Rio Tinto (RIO.L: ), Xstrata (XTA.L: ) and Eurasian Natural Resources (ENRC.L: ) fell 0.2 to 1.7 percent.

Airlines and travel companies extended their sharp declines from the previous session due to the widespread cancellation of flights in Europe. The disruption has cost airlines $250 million a day.

British Airways (BAY.L: ), Lufthansa (LHAG.DE: ), Iberia (IBLA.MC: ), Ryanair (RYA.I: ), Aer Lingus (AERL.I: ) and Air France-KLM (AIRF.PA: ) lost 2.7 to 7.7 percent. TUI Travel (TT.L: ) and Thomas Cook (TCG.L: ) slipped 1.2 percent and 1.6 percent respectively.

Among food companies whose raw material supplies could be hit by trade disruptions, Nestle (NESN.VX: ) fell 3.4 percent.

On the upside, Eurotunnel (GETP.PA: ) rose 3.5 percent as travelers sought alternative routes. Philips Electronics (PHG.AS: ) gained 3.3 percent after reporting first-quarter operating profit above the most optimistic forecast, driven by its lighting unit and cost cuts.

(Editing by David Holmes)

Europe shares hit 1-week closing low on Goldman, ash