By Ana Nicolaci da Costa
LONDON, March 6 (Reuters) - European shares fell on Thursday
as weak U.S. housing data fanned worries about global growth,
hurting financial stocks, while a hawkish European Central Bank
dashed any hopes the bank might cut rates any time soon.
The FTSEurofirst 300 index <> closed down 1.4 percent
at 1,282.90 in a volatile session, mirroring losses across the
Atlantic where U.S. stocks struggled with news of a default at a
home lender.
Banks were the biggest drag on the index. HSBC <HSBA.L>, ING
<ING.AS>, BNP Paribas <BNPP.PA> and Barclays <BARC.L> fell
between 2.7 and 4.7 percent, finding little respite from ECB
President Jean-Claude Trichet's comments that he would do what
was needed on prices in the medium term.
UBS <UBSN.VX> closed down 4.7 percent, having earlier
trimmed losses after CNBC cited bond manager Pimco denying
market talk that it had bought $24 billion of Alt-A investments
from the Swiss bank. Pimco officials were not immediately
available to comment on the CNBC report while UBS declined
comment.
"People still are in a state of uncertainty on the economic
front, clearly ahead of tomorrow's key number which will be the
non-farm payrolls," said Edmund Shing, a strategist at BNP
Paribas in Paris.
The U.S. employment report is due on Friday and investors
are nervous after Thursday's data showed the U.S. private sector
unexpectedly shed jobs for the first time in nearly five years
in February.
In this session, investors grappled with more bad news from
the U.S. housing sector after the Mortgage Bankers Association
said U.S. home foreclosures and the rate of homes entering the
foreclosure process rose to record highs in the fourth quarter.
Also weighing on the U.S. financial sector, Thornburg
Mortgage Inc <TMA.N>, a "jumbo" mortgage lender, said it had
received a letter from JPMorgan Chase notifying it of a default
after it failed to meet a margin call of about $28 million.
If this was not enough, Dutch insurer Aegon NV <AEGN.AS>
fell 5.7 percent after posting a 26 percent drop in quarterly
net profit to 648 million euros ($984 million), hurt by currency
effects and investment writedowns.
And a spokesman for Lehman Brothers <LEH.N> said the
investment bank had suspended two London equities traders after
identifying "issues" with some of their trades, but said their
suspension was not related to fraud.
RATE DECISIONS
Around Europe, Britain's FTSE 100 <> fell 1.5 percent,
Germany's DAX <> eased 1.4 percent and France's CAC 40
<.FHCI> shed 1.7 percent after both the ECB and the Bank of
England left rates on hold, at 4 and 5.25 percent respectively.
Airlines also took a hit.
British Airways <BAY.L> dropped nearly 8 percent after
warning that airlines were entering a downward cycle due to
global economic weakness, with high fuel costs piling on further
pressure. Air France-KLM <AIRF.PA> fell 5.9 percent and
Lufthansa <LHAG.DE> lost 3.5 percent.
But European retailers and utilities bucked the trend.
France's Carrefour <CARR.PA> unveiled a slight rise in 2007
profits and forecast faster growth in 2008, and speculation that
a major shareholder may increase its stake in the world's
second-largest retailer also helped lift its shares by 4.1
percent. It was the biggest weighted gainer in the index.
Dutch supermarket group Ahold <AHLN.AS> rose more than 3
percent after posting forecast-bearing fourth-quarter net profit
and giving a strong outlook.
The world's largest utility, E.ON <EONG.DE>, rose 1.3
percent after it raised 2007 earnings slightly more than the
market had expected, benefiting from higher power prices in
central and northern Europe and soaring gas prices.
But the biggest percentage gainer was Akzo Nobel <AKZO.AS>,
which jumped more than 9 percent. The world's biggest producer
of paints posted forecast-beating fourth-quarter results.
Elsewhere, Nestle <NESN.VX> rose 1.1 percent and Tesco
<TSCO.L> gained 2.9 percent.
(Editing by Quentin Bryar)
