By Eva Kuehnen
FRANKFURT, Feb 29 (Reuters) - Financials led European shares
lower on Friday as investor concern grew over the outlook for
economic growth, prompting a safe-haven switch into the telecoms
and food and drinks sectors.
Swiss Re <RUKN.VX>, the world's largest reinsurer, was among
the few gainers in the financial sector, rallying 4.4 percent
after its results beat expectations and the company raised its
dividend.
Banks were the worst performers. The DJ Stoxx European
banking index <.SX7P> fell 1.2 percent with UBS <UBSN.VX> down
3.7 percent, HBOS <HBOS.L> dropping 2.8 percent and Royal Bank
of Scotland <RBS.L> down 1.5 percent.
By 1015 GMT, the pan-European FTSEurofirst 300 index
<> was down 0.4 percent at 1,328.29 points. The index
declined 1.8 percent on Thursday and has lost 11.5 percent since
the beginning of the year.
U.S. and Asian stock markets fell after a warning from
Federal Reserve Chairman Ben Bernanke that some small U.S. banks
could fail, heightening fears of a recession in the world's
largest economy.
"Bernanke scared us quite a bit yesterday with his warning
about bank failures. And that continues to have an effect
today," one Frankfurt-based trader said.
"Everyone is cautious ahead of the weekend. No one wants to
take risks, particularly ahead of important U.S. data like the
University of Michigan consumer sentiment index and the Chicago
PMI index later this afternoon," he added.
The Reuters/University of Michigan consumer sentiment index
is due at 1455 GMT. Another reading of confidence earlier this
week showed U.S. consumer sentiment hit a five-year low in
February.
The Chicago PMI index, which measures business activity in
the auto-intensive Midwest region, is due at 1445 GMT.
Swiss Re's results came a day after the world's largest
insurer American International Group Inc <AIG.N> posted its
biggest-ever quarterly loss.
Germany's Allianz <ALVG.DE> was one of the strongest drags
on Germany's top-30 DAX index <>, falling 1.8 percent and
Assicurazioni Generali <GASI.MI>, Europe's number-three insurer,
dropped 1.5 percent.
But Austria's Erste Bank <ERST.VI> gained 4.5 percent after
central Europe's second-biggest lender beat forecasts with a 22
percent rise in fourth quarter net profit.
Germany's DAX fell 0.3 percent and was the weakest performer
among its European counterparts, with Britain's FTSE 100 index
<> and France's CAC 40 <> both down 0.2 percent.
Oil companies rose as crude futures <CLc1> touched a new
high above $103. BP <BP.L> added 0.5 percent and was among the
strongest positive weights on the European benchmark index.
Reflecting a drop in investor risk appetite, shares in
telcoms and food and beverage companies were among the main
gainers.
The DJ Stoxx European telecoms index <.SXKP> rose 0.7
percent and the DJ Stoxx European beverage index <.SX3P> added
0.5 percent.
Societe Generale strategists said in a note to clients about
the food and beverage sector: "Despite strong soft commodities
inflation, we appreciate the defensive qualities of the sector,
which has demonstrated its pricing power and do not think that
valuations are too stretched yet."
Elsewhere, shares in Belgian chemicals, plastics and drug
maker Solvay <SOLB.BR> dropped 3.3 percent after U.S. peer Wyeth
Pharmaceuticals <WYE.N> ended collaboration on would-be
blockbuster schizophrenia drug bifeprunox.
(Editing by David Cowell)
