European shares close lower; UBS falls on bank woes

By Brian Gorman

LONDON (BestGrowthStock) – European shares slipped on Tuesday, as UBS (UBSN.VX: ) fell after reporting its investment banking unit made a loss, and weaker U.S. house prices cast further doubt on the strength of the economic recovery.

However, analysts said weak economic data boosted hopes the Federal Reserve would announce further quantitative easing (QE).

The pan-European FTSEurofirst 300 (.FTEU3: ) index of top shares fell 0.2 percent to close at 1,089.98 points, after rising 0.3 percent on Monday to end near a six-month high.

The European benchmark is up more nearly 69 percent from its lifetime low of March 2009, as several countries emerged from recession, helped by fiscal stimulus.

“As we get nearer to next week, and the probable announcement of more QE, it is possible the market may have a bit of a pause,” said Bill Dinning, head of strategy at Aegon Asset Management.

UBS was among the biggest fallers, down 5 percent after Switzerland’s largest bank said its investment banking arm made a third-quarter loss.

Falls in heavyweight basic resources stocks also put pressure on the market, with the world’s largest steelmaker ArcelorMittal (ISPA.AS: ) down 5 percent after predicting a weaker than expected fourth-quarter due to muted demand, lower prices, and higher raw material costs.

Peers ThyssenKrupp (TKAG.DE: ) and Salzgitter (SZGG.DE: ), were down 2.7 percent and 4.4 percent respectively.

Miners also fell, as a stronger dollar hurt metals prices.

Anglo American (AAL.L: ) and Rio Tinto (RIO.L: ) fell 1.7 and 1.2 percent respectively.

BHP Billiton (BLT.L: ) fell 2.5 percent. Saskatchewan’s securities regulator will hear the company’s challenge to Potash Corp’s (POT.TO: ) shareholder rights plan on November 8-9, assuming the federal government allows BHP’s $39 billion bid to proceed.

U.S. CONSUMER CONFIDENCE LOW

Prices of U.S. single-family homes fell in August, hovering around recent lows after homebuyer tax credits expired, according to a Standard & Poor’s/Case-Shiller home price report.

U.S. consumer confidence rose slightly in October, but remained near historically low levels as concerns about the labor market persisted, according to a private sector report released on Tuesday.

Analysts said the weak economic data suggested there could be further quantitative easing.

Britain may also announce more quantitative easing, but data on Tuesday showed that the country’s economy grew by 0.8 percent in the third quarter, much faster than expected.

Across Europe, Britain’s FTSE 100 (.FTSE: ) ended the day 0.8 percent lower; Germany’s DAX (.GDAXI: ) and France’s CAC 40 (.FCHI: ) fell 0.4 and 0.5 percent respectively.

CAIRN FALLS

Other individual fallers included Cairn Energy (CNE.L: ), down 7.2 percent after the oil explorer said one of its wells in Greenland did not result in a commercial discovery and another failed to reach target depth before the end of the Arctic drilling season.

Vestas Wind (VWS.CO: ) shed 10.3 percent after the wind turbine maker lowered its expectations for the European market in 2011.

And Oriflame Cosmetics (ORIsdb.ST: ) fell 10.4 percent, after third-quarter profit (Read more your timing to make a profit.) trailed estimates.

“One or two of the results today have been below expectations,” Aegon’s Dinning said. However, he said that “in aggregate” results season had shown signs of recovery.

French luxury goods maker Hermes (HRMS.PA: ) fell 11.8 percent, giving back most of the stock’s stellar gains made on Monday after bigger rival LVMH (LVMH.PA: ) surprised the market by unveiling a significant stake in Hermes.

On the upside, cruise operator Carnival (CCL.L: ) rose 4.3 percent, after Rival Royal Caribbean Cruises (RCL.N: ) (RCL.OL: ) soared 15 percent on posting strong quarterly profit.

(Editing by Sharon Lindores)

European shares close lower; UBS falls on bank woes