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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Withering food stocks send European shares lower

(Reuters) - European shares ended down on Friday after briefly touching their lowest level since December 2006, led by weaker food and beverage stocks, as concern the U.S. subprime crisis was far from over darkened investors' mood.

Among major movers, Unilever Plc/NV (UNc.AS: Quote, Profile, Research) fell 5 percent following a Morgan Stanley downgrade of the consumer goods giant, dragging down others in the sector.

The DJ Stoxx European food and beverage index fell 3.8 percent, marking its worst sell off since June 2003, with Nestle (NESN.VX: Quote, Profile, Research) declining 4.3 percent, Danone (DANO.PA: Quote, Profile, Research) 3.2 percent lower, and Pernod Ricard ( PERP.PA: Quote, Profile, Research) down 4.1 percent.

The pan-European FTSEurofirst 300 index closed down 0.55 percent at 1,428.89 points, regaining some ground after touching the mark of 1,420.90, its lowest since early December 2006. It closed down 1.9 percent on the week.

"We had a year-end party and now we've got a proper hangover," said Susanne Lahmann, equity strategist at German bank Bremer Landesbank.

 

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U.S. Stocks Decline; American Express, Tiffany Fall on Outlooks

(Bloomberg) -- U.S. stocks fell as lower-than- estimated profit forecasts at American Express Co. and Tiffany & Co. heightened concern the economy is shrinking and sent the Standard & Poor's 500 Index to its worst start since 1991.

American Express, the third-largest U.S. credit-card network, fell in New York Stock Exchange trading after its projection for first-quarter earnings trailed analysts' estimates by 3.2 percent. Tiffany, the second-biggest luxury jewelry seller, lost the most in more than three years after holiday sales growth shrank to 8 percent. Countrywide Financial Corp. retreated after Bank of America Corp. agreed to buy the mortgage lender for less than its market value.

The Standard & Poor's 500 Index slipped 9.68, or 0.7 percent, to 1,410.73 as of 12:52 p.m. in New York, extending its decline this year to 3.9 percent. The benchmark for U.S. equities has dropped for three straight weeks, the longest streak since August. The Dow Jones Industrial Average decreased 163.79, or 1.3 percent, to 12,689.3. The Nasdaq Composite Index dropped 28.17, or 1.1 percent, to 2,460.35. About two shares declined for every one that rose on the NYSE.

``There was this perception that the upper-end consumer was resistant to the economy, and that may be starting to roll over,'' said Matthew Kaufler, who helps manage $2.6 billion at Clover Capital Management in Rochester, New York. ``Housing has been in recession, the financial institutions are also feeling it, and now you have signs that the consumer is starting to buckle. We seem to be in a rolling recession.''

 

Read more at Bloomberg