UK Market News

Wednesday December 3, 10:29 AM
Europe shares drop on oils; weak data dents mood

By Nicholas Vinocur LONDON, Dec 3 (Reuters) - European stocks fell 1.8 percent early on Wednesday, with oil and bank shares leading the decline as investors digested a sharp drop in business services activity in the euro zone economy. At 0951 GMT, the pan-European FTSEurofirst 300 index was down 1.8 percent at 810.24 points, having risen 1.8 percent the day before. Oil shares were the biggest losers on the index, with BP , Royal Dutch Shell (Amsterdam: RDSA.AS - news) and Total losing between 2.6 and 4.1 percent. Oil rose above $47 a barrel, recovering from a near 5-percent tumble the day before. Electricite de France dropped more than 6 percent after it offered to buy a 50 percent stake in Constellation Energy Group Inc's nuclear business. Banks were trading lower, with Anglo Irish Bank (Dublin: CKL1.IR - news) falling by 11.7 percent after it posted a 34 percent decline in full-year earnings, while Commerzbank (Xetra: 803200 - news) fell 3.5 percent and Swedbank (Stockholm: SWEDA.ST - news) lost 2.3 percent. Allied Irish Bank was up 1.7 percent, however, on hopes it would be recapitalised by the Irish government. Royal Bank of Scotland was up 2.8 percent. Analysts said markets were braced for more bad news about the state of the world's major economies and expecting decisive action on interest rates from central banks. 'The fact is nobody is expecting anything good out of economic data these days, and a lot of the gloom has already been priced in,' said James Hughes, an equity strategist at CMC markets. GRIM DATA Euro zone services activity fell further than initially thought in November, to a fresh record low, while inflationary pressures continued to subside, a key survey showed. The news added more weight to expectations that the European Central Bank (CBSU.PK - news) and the Bank of England will announce aggressive interest rate cuts on Thursday. 'If we get a big cut from the ECB it will be a shot in the arm for the market, but we have to be careful these moves aren't factored in already. If we get any big surprises, they could be seen as a panic measure or compensating for earlier inaction,' Hughes added. Miners were lower, with Rio Tinto (LSE: RIO.L - news) falling 8.7 percent on market talk of a rights issue. The company was not immediately available for comment. Anglo American (LSE: AAL.L - news) , Eurasian, and Lonmin (LSE: LMI.L - news) all fell between 2.1 and 2.3 percent as gold and copper prices fell. Later in the session, investors will look to U.S. non-manufacturing PMI figures due at 1500 GMT for clues about the health of the world's largest economy. On the data front, euro zone retail sales data at 1000 GMT, and U.S. non-manufacturing PMI figures due at 1500 GMT will be in focus. (Reporting by Nicholas Vinocur; editing by Simon Jessop) Keywords: MARKETS EUROPE STOCKS ============================================================= For rolling updates on what is moving European shares please click on ============================================================= For pan-Europeanmarket data and news, click on codes in brackets: European Equities speed guide................... FTSEurofirst 300 index.............................. DJ STOXX index...................................... Top 10 STOXX sectors........................... Top 10 EUROSTOXX sectors...................... Top 10 Eurofirst 300 sectors................... Top 25 European pct gainers....................... Top 25 European pct losers........................ Main stock markets: Dow Jones (news) ............... Wall Street report ..... Nikkei 225 (news) ............. Tokyo report............ FTSE 100............... London report........... Xetra DAX............. Frankfurt market stories CAC-40................. Paris market stories... World Indices...................................... Reuters survey of world bourse outlook.......... Western European IPO diary........................... European Asset Allocation......................... Reuters News at a Glance (GLCE.PK - news) : Equities............... Main currency report:............................... Keywords: MARKETS EUROPE STOCKS/ =2 ============================================================= For rolling updates on what is moving European shares please click on ============================================================= For pan-Europeanmarket data and news, click on codes in brackets: European Equities speed guide................... FTSEurofirst 300 index.............................. DJ STOXX index...................................... Top 10 STOXX sectors........................... Top 10 EUROSTOXX sectors...................... Top 10 Eurofirst 300 sectors................... Top 25 European pct gainers....................... Top 25 European pct losers........................ Main stock markets: Dow Jones............... Wall Street report ..... Nikkei 225............. Tokyo report............ FTSE 100............... London report........... Xetra DAX............. Frankfurt market stories CAC-40................. Paris market stories... World Indices...................................... Reuters survey of world bourse outlook.......... Western European IPO diary........................... European Asset Allocation......................... Reuters News at a Glance: Equities............... Main currency report:............................... Keywords: MARKETS EUROPE STOCKS/ =3