European shares tumble after Goldman fraud charge

By Brian Gorman

LONDON (BestGrowthStock) – European shares fell sharply on Friday, led lower by banking stocks, after investment bank Goldman Sachs (GS.N: ) was charged with fraud by the U.S. Securities and Exchange Commission.

The SEC charged Goldman in relation to the structuring and marketing of a debt product tied to subprime mortgages.

The FTSEurofirst 300 (.FTEU3: ) index of top European shares fell 1.5 percent to close at 1,095.30 points. Over the week, the index fell 0.6 percent, ending six straight weeks of gains.

The European benchmark is up more than 69 percent from its lifetime low of March 9, 2009.

“If someone like Goldman Sachs is being sued this is painful for the entire industry,” said Heino Ruland, strategist at Ruland Research, in Frankfurt.

“But this is a one-time event. I don’t think it will carry into next week, as there is a lot of data and earnings for investors to focus on.”

Goldman Sachs shares fell 15 percent in New York.

European banks to fall included BNP Paribas (BNPP.PA: ), Banco Santander (SAN.MC: ), Barclays (BARC.L: ), Deutsche Bank (DBKGn.DE: ), Credit Agricole (CAGR.PA: ) and HSBC (HSBA.L: ), down between 2 and 7.3 percent.

Royal Bank of Scotland (RBS.L: ) bucked the trend in the sector, rising 5.1 percent after BofA Merrill Lynch hiked its target and said the shares could double on a two-year view.

Commodities stocks fell on lower metals and crude prices slipped, as the dollar strengthened.

Miners Anglo American (AAL.L: ), Antofagasta (ANTO.L: ), BHP Billiton (BLT.L: ), Kazakhmys (KAZ.L: ), Lonmin (LMI.L: ), Rio Tinto (RIO.L: ), and Xstrata (XTA.L: ) fell between 3 and 4.4 percent.

Total (TOTF.PA: ), BP (BP.L: ) and Royal Dutch Shell (RDSa.AS: ) fell between 1.1 and 1.7 percent.

Across Europe, Britain’s FTSE 100 (.FTSE: ) ended the day 1.4 percent lower; Germany’s DAX (.GDAXI: ) and France’s CAC40 (.FCHI: ) fell 1.8 and 1.9 percent, respectively.

Wall Street was lower around the time European bourses were closing. The Dow Jones (.DJI: ), S&P 500 (.SPX: ) and Nasdaq Composite (.IXIC: ) were down between 1 and 1.5 percent.

Both General Electric (GE.N: ) and Bank of America (BAC.N: ) fell, despite strong results, as the Goldman issue hurt sentiment.

U.S. economic news was mixed. Permits to build new U.S. homes unexpectedly surged in March to their highest level in more than 1-1/2 years, but a surprise dip in consumer confidence tempered optimism.


Among individual stocks, retailer Carrefour (CARR.PA: ) gained 1.4 percent after it posted its first rise in underlying quarterly sales for 18 months and unveiled a 1.6 billion euro share buyback to reflect confidence in its recovery plan.

But British supermarket giant Tesco (TSCO.L: ), which reports on Tuesday, fell 1.8 percent.

SKF (SKFb.ST: ), the world’s biggest bearing maker, jumped 5.8 percent after reporting better-than-expected first-quarter results. Its peer engineering group Sandvik (SAND.ST: ) gained 4.7 percent.

Airline stocks were hurt as a huge ash cloud from an Icelandic volcano caused further air travel chaos across Europe on a scale not seen since the September 11 attacks, leaving hundreds of thousands of passengers stranded.

Lufthansa (LHAG.DE: ), British Airways (BAY.L: ), Air Berlin (AB1.DE: ), Air France-KLM (AIRF.PA: ), Iberia (IBLA.MC: ) and Ryanair (RYA.I: ) fell between 2.5 and 4.1 percent.

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(Editing by Will Waterman)

European shares tumble after Goldman fraud charge