* Europe's benchmark index closes 0.1 percent lower
* Financials among top losers; Swiss Re down 28 percent
* Economic data paints grim picture for corporate earnings
By Peter Starck
FRANKFURT, Feb 5 (Reuters) - A 28 percent collapse in shares
of reinsurer Swiss Re <RUKN.VX> and bleak economic data on both
sides of the Atlantic, boding ill for corporate earnings, pulled
down European stock markets in volatile trading on Thursday.
The pan-European FTSEurofirst 300 index <> closed 0.1
percent lower at 810.49 points, well above its intra-day low of
792.48 points after a late rally tracking U.S. stocks.
U.S. stocks rose on hopes a White House plan to shore up the
financial system would help banks stem losses and revive
lending.
Swiss Re tumbled 28 percent after it posted a full-year net
loss of about 1 billion Swiss francs and said U.S. investor
Warren Buffett's Berkshire Hathaway was investing 3 billion
Swiss francs ($2.63 billion) in the company.
Swiss Re wrote down twice that amount in toxic assets and
said it would consider further equity raising of up to 2 billion
francs.
Deutsche Bank <DBKGn.DE> fell 4.2 percent after Germany's
biggest lender posted a net loss of almost 4 billion euros and
predicted a bleak future.
"There is not much in the way of good news except that the
news was not worse than expected," Fox-Pitt Kelton said in a
note, adding: "The outlook statement was hardly encouraging".
Swiss bank UBS <UBSN.VX> lost 6.5 percent and Societe
Generale <SOGN.PA> of France dropped 5.7 percent. The DJ Stoxx
bank index <.SX7P> fell 1.4 percent.
PERSISTENT WEAKNESS
Europe's stock markets shrugged off expected monetary policy
decisions by The Bank of England, which cut its base rate by 50
basis points to a record low 1.0 percent, and the European
Central Bank (ECB), which left its key interest rates unchanged.
ECB President Jean-Claude Trichet warned of persistent
weakness in coming quarters and economic data painted a grim
picture.
The number of U.S. workers filing new claims for jobless
benefits jumped to a 26-year high last week, German industry
orders slumped 27.7 percent in December, and Spanish industrial
production fell by almost a fifth in December, the largest
decline on record.
"Given the development of order intake, production and sales
will fall significantly in Q1 compared to Q1 last year and most
of the industrial heavyweights will report losses," brokerage
Steubing said in a note on the German data.
German industrial companies' second-quarter earnings would
also be weak, Steubing said.
"It is unclear how much damage the first two quarters of
this year will do to the quality of balance sheet i.e. to what
levels equity capital will fall," Steubing said, adding this
meant it would be premature to re-enter the stock market now.
Commerzbank said higher share prices "are only possible once
there is more evidence that the recession will come to an end."
Citigroup said global corporate earnings were "only a
quarter of the way through an expected 50 percent drop".
"To be able to call a meaningful turn in global equities we
need to be closer to the bottom in the corporate earnings
cycle," Citigroup said, adding that was more likely in 2010.
HOLDING ABOVE LOWS
Fortis Investments was more upbeat, its strategist Joost van
Leenders saying: "All the doom and gloom has not pushed markets
to below the lows of Nov. 20, 2008 ... we expect economic
stabilisation in the second half of the year, which should be
positive for equities."
Thursday's close leaves the FTSEurofirst 300 index 6.5
percent above its 2008 low set in late November.
Shares in Unilever <ULVR.L><UNc.AS> lost 6 percent after
the Anglo-Dutch consumer goods group scrapped all its targets
due to global economic uncertainty, despite beating forecasts
with a 7.3 percent rise in fourth-quarter underlying sales.
Among gainers, BG Group Plc <BG.L> climbed 10 percent after
the British gas producer reported quarterly profits above
expectations and gave a buoyant outlook for future growth.
TUI Travel <TT.L>, Europe's biggest travel firm, rose 8
percent after the company said it was well positioned to perform
in line with its expectations for the current year.
Stock market performance around Europe was uneven with
London's FTSE 100 <> closing flat and Frankfurt's DAX
<> edging up 0.4 percent while the French CAC 40 <>
lost 0.1 percent and Zurich's SMI <> tumbled 2.3 percent.
(Additional reporting by Rebekah Curtis in London; Editing by
Andrew Macdonald)
