By Blaise Robinson
PARIS, April 14 (Reuters) - European stocks fell in early
trade on Monday, dropping for the fifth session in a row as
Philips Electronics <PHG.AS> became the latest company to spook
investors with weak results.
At 0825 GMT, the FTSEurofirst 300 <> index of top
European shares was down 0.7 percent at 1,276.12 points. The
index has lost about 4 percent over the past week, and is down
15 percent on the year.
Weak earnings from General Electric <GE.N> on Friday
cemented the view that the U.S. economy was tipping into
recession, sparking a stock sell-off around the world.
Philips Electronics shed 3.1 percent on Monday after
reporting a 28 percent drop in core profit, below average
analyst expectations, hurt by its loss-making TV business and
acquisition-related charges.
Banks were also among the biggest laggards, with the DJ
Stoxx banking index <.SX7P> down 1.1 percent. Banco Santander
<SAN.MC> dropped 1.2 percent, UniCredit <CRDI.MI> was down 1.3
percent, and UBS <UBSN.VX> down 2.9 percent.
Credit Suisse <CSGN.VX> dropped 3.4 percent. Speculation
intensified over the weekend that Credit Suisse would announce
hefty writedowns in the coming weeks, with Swiss newspapers
pointing to value reductions of 3 to 5 billion Swiss francs. The
bank declined to comment.
"Despite the optimism of UBS CEO Marcel Rohner that the firm
is over the worst of its problems, elsewhere Citigroup and
Merrill Lynch are set to unearth further losses this week,
proving that we are still yet to have heard the last of
writedowns," Simon Denham, managing director at Capital Spreads
wrote in a note.
"Billions more dollars are due to knock U.S. banking
profits... and uncertainty is growing as not even the banks know
exactly how much more their balance sheets have been depleted
by. Such was the abuse and misselling of these mortgage backed
securities that the markets are set for another turbulent few
weeks."
Banking stocks have been hit over the past nine months by
the debacle in the risky U.S. subprime mortgage market that
forced many banks to announce massive asset writedowns and
emergency capital increases.
Later in the week, investors will comb through quarterly
results from JPMorgan Chase & Co <JPM.N>, due on Wednesday,
Merrill Lynch & Co <MER.N>, due on Thursday, and Citigroup Inc
<C.N>, due on Friday, expected to shed light on the global
credit crisis.
Mining shares also retreated along with base metal prices.
Rio Tinto <RIO.L> was down 2.5 percent, and Anglo American
<AAL.L> down 2.6 percent.
British Airways <BAY.L> lost 1.9 percent after Morgan
Stanley downgraded its rating on the airline to "underweight"
from "equal weight" and slashed its price target to 120 pence
from 245 pence, citing "increased evidence of 2009 earnings
risk, as well as increased pressures from a troubled move to T5
and an aggressive pilots' union."
Among the few stocks on the rise, French retailer Carrefour
<CARR.PA> gained 1.8 percent. Blue Capital, a holding company
owned by billionaire Bernard Arnault and property group Colony
Capital, said on Friday it had raised its stake in the group to
10.7 percent.
Food group Danone <DANO.PA> rose 2 percent after reporting a
19 percent rise in quarterly sales and saying it was on course
to meet its 2008 targets for sales and earnings growth.
Around Europe, Germany's DAX index <> was down 0.9
percent, UK's FTSE 100 index <> down 0.7 percent and
France's CAC 40 <> down 0.4 percent.
On the macro front, investors will keep an eye on U.S.
retail sales data for March, expected at 1230 GMT, for more
clues on the outlook for the world's biggest economy.
"All the negative factors that weigh on households'
confidence intensified in March and early April: gasoline prices
surged to a new record high, employment continued to fall in
March, home prices probably extended their losses, credit
conditions remain tight and the stock markets are barely 10
percent down from the start of the year... Nothing to fuel
optimism for today's retail sales data for March," Global
Equities analysts wrote in a note.
(editing by Elizabeth Fullerton)
