By Toni Vorobyova
LONDON, May 9 (Reuters) - European stocks fell by midday on
Friday, on track for their first weekly loss in a month, as a
hefty loss at U.S. insurer AIG <AIG.N> weighed on financials and
a record-high oil price hurt the broader market.
The FTSEurofirst 300 index were down 1.7 percent by 1021 GMT
at 1,337.53 points <>. If sustained until the close, that
would be the biggest one-day drop since mid-March and would snap
a three-week-long winning streak on the index.
Banks <.SX7P> were the biggest negative weight on the index.
As well as AIG's $7.8 billion quarterly loss, financials were
hurt by the possibility of big asset sales at Citigroup <C.N>.
Worries about the health of the financial sector combined
with a fresh record high in oil prices near $125 a barrel <CLc1>
to hit risk appetite, leading to broad pressure on equities.
"(There are) writedowns at AIG and the capital raising,
some poor results from European insurers, some stocks downgrades
in the financial sector. And the oil price is pretty high, which
might be unsettling people a little," said Kevin Gardiner,
global equity strategist at HSBC.
"The market has rallied in the last few weeks as well, so I
am sure people are inclined to take profits."
AXA <AXAF.PA> was down 2.9 percent, Aegon <AEGN.AS> down 1
percent and Standard Life <SL.L> down 2.6 percent. The DJ Stoxx
index of European insurers <.SXIP> was down 2.1 percent.
Decliners on the FTSEurofirst outnumbered gainers by more
than ten to one <.AD.FTEU3>.
NOT OUT OF THE WOODS YET
Citigroup, the largest U.S. bank, could announce as much as
$400 billion of "non-core" assets are up for sale when it meets
with investors and analysts later in the day, people familiar
with the situation said.
"Over the past weeks, investors got the feeling that the
credit crisis was easing, but a piece of news like that is sort
of a wake-up call that reminds us that the storm is far from
over," said Marie-Pierre Peillon, head of equity and credit
research at Groupama Asset Management in Paris.
"This Citigroup move might just be the beginning."
Societe Generale <SOGN.PA>, BNP Paribas <BNPP.PA> and
Barclays <BARC.L> all lost around 3 percent.
Allianz <ALVG.DE> was down 1.6 percent. Its Dresdner Bank
unit posted a quarterly loss after writing down 845 million
euros on structured finance investments.
In a sign the credit crunch is sending waves well beyond the
the financial sector, Spain's Grupo Ferrovial lost 4 percent
<FER.MC> after its British airport operator unit BAA said it may
not be in a position to start debt renegotiations in the coming
weeks as planned because of market conditions.
"We are not out of the woods yet," Lena Komileva, head of G7
market economics at Tullett Prebon said in a research note.
"Risk remains a multi-dimensional story and ... the economic
costs are mounting as the crunch moves to the real economy."
European car makers were also on the downside after Toyota
Motor Corp <7203.T>, the world's biggest automaker, forecast its
first decline in annual net profit in seven years.
Peugeot <PEUP.PA> was down 2.4 percent and Daimler
<DAIGn.DE> fell 2 percent.
Sanofi-Aventis <SASY.PA> dropped 5 percent after generic
drug maker Schweizerhall said it was close to winning approval
for a generic version of the French firm's blockbuster
blood-thinning drug Plavix in Germany. A spokesman for Sanofi
said Plavix was protected in Europe by its patent until 2013.
On the scant gainers' list, German utility E.ON <EONG.DE>
briefly rose as much as 3 percent on speculation of a possible
bid from France's EDF <EDF.PA>, traders said, before easing to
show a gain of 1.45 percent. E.ON declined to comment.
Around Europe, Germany's DAX index <> was down 1.3
percent, Britain's FTSE 100 index <> down 1.4 percent and
France's CAC 40 <> down 2.3 percent.
(Additional reporting by Blaise Robinson; Editing by Quentin
Bryar)
