Euro stocks dive to 13-month low

(Fin24) - European stocks fell to their lowest since December 2006 by midday on Friday, tracking a drop in US futures on renewed worries over the troubled subprime mortgage market, with consumer product shares hurt by brokerage downgrades.

Unilever sank 5% after Morgan Stanley cut its recommendation to "underweight". France's L'Oreal, the world's largest cosmetics group, tumbled 4.8% after Deutsche Bank lowered its rating to "sell", citing mounting pressure on margins from rising commodity prices and risks of a slowdown in consumer spending.

At 1255 GMT, the FTSEurofirst 300 index of top European shares was down 0.5% to 1 429.15, after falling to as low as 1 420.90 - retreating for the sixth time in eight sessions.

After posting a thin 1.6% gain in 2007, its worst annual performance since 2002, the index has already lost 5.1% in 2008, hammered by mounting worries over the prospect of a US recession.

"The market is in the process of pricing in a US recession, turning into bear mode, with more forecast downgrades looming," said Jean-Luc Buchalet, strategist at FactSet in Paris.

"Defensive stocks have been showing some resilience, such as telecoms and pharmaceuticals, while all the other sectors are just sinking," he said.
 

 

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