European shares stung by debt worries; BP falls

By Harpreet Bhal

LONDON (BestGrowthStock) – European shares fell on Monday, as worries over debt problems in Hungary added to jitters about fiscal health in Europe, while BP (BP.L: ) was pressured by a broker downgrade and concern over the impact of its oil spill.

The pan-European FTSEurofirst 300 (.FTEU3: ) index of top shares closed 0.8 percent lower at 990.49 points, slipping back after earlier rising to an intraday high at 1,000.50.

The index has lost 11 percent since mid-April when fears of a sovereign debt crisis in the euro zone prompted investors to abandon riskier assets.

“There is a lot of nervousness in the market. On the one hand we have the positive (German manufacturing) data, but there is also anxiety about Hungary keeping pressure on the market,” said Heinz-Gerd Sonnenschein, equity markets strategist at Deutsche Postbank.

Hungary’s government vowed to cut spending on Monday as it strove to repair the damage from comments last week about a possible Greece-style debt crisis there, but a lack of policy detail kept markets on edge.

Banks were among the worst off, with Barclays (BARC.L: ), HSBC (HSBA.L: ), Societe Generale (SOGN.PA: ), BNP Paribas (BNPP.PA: ) and Deutsche Bank (DBKGn.DE: ) off 0.1 to 2 percent.

Euro zone finance ministers played down market concerns that Hungary, which is outside the bloc, could plunge into a debt crisis like Greece and said Budapest’s troubles did not threaten the currency area.

Helping to support some positive sentiment on the index, data showed German manufacturing orders jumped far more than expected in April, with suggestions of a rise in investment adding to signs Europe’s largest economy is on the path to durable growth.

BP (BP.L: ) fell 0.7 percent after the U.S. Coast Guard said the United States would be dealing with the spill in the Gulf of Mexico for another four to six weeks after its ruptured well was capped. The Coast Guard said BP was aiming to double the amount of oil it was capturing to 20,000 barrels per day.

Adding to the pressure, Goldman Sachs downgraded the oil major to “neutral” from “buy,” saying the spill would not only incur clean-up and legal costs but could also impact the firm’s ability to do business in the U.S. and worldwide.

OTE TELECOM SLIDES

Greek telecom group OTE (OTEr.AT: ) fell 11.7 percent after saying it would propose 0.19 euro dividend to shareholders at the annual meeting on June 16, down from an initial proposal of 0.50 euros.

Spain’s Grifols (GRLS.MC: ) shed 8.5 percent after saying it would buy U.S.-based Talecris Biotherapeutics (TLCR.O: ), which makes plasma-based protein therapies, for $3.4 billion in a bold move to expand its business in blood products.

On the upside, Adidas (ADSG.DE: ) gained 2 percent after Deutsche Bank upgraded the sporting goods maker to “buy” from “hold,” saying it would benefit from the weaker euro.

Across Europe, Britain’s FTSE 100 (.FTSE: ), Germany’s DAX (.GDAXI: ) and France’s CAC 40 (.FCHI: ) was down 0.6 to 1.2 percent.

Investment Research

(Graphics by Scott Barber; editing by Karen Foster)

European shares stung by debt worries; BP falls