By Amanda Cooper
LONDON, May 6 (Reuters) - European shares fell on Tuesday,
weighed down by banks and insurers after UBS <UBSN.VX> sought to
purge itself of the impact of the credit crisis and Swiss Re
<RUKN.VX> announced another round of writedowns.
UBS shares fell 4.5 percent and were the top losers in the
broader European equity market.
Investors were concerned that the credit crisis, which has
visited Europe's biggest writedowns on UBS, had badly damaged
the bank's earnings power, as signalled by a sharp slowdown in
new money entrusted to it by its large base of wealthy clients.
Swiss Re, the world's largest reinsurer, weighed on the
insurance sector, after reporting a steep drop in first-quarter
net profit that took nearly 5 percent off its shares.
Weighing further on the market was U.S. home financing group
Fannie Mae <FNM.N>, which cut its dividend and unveiled plans to
raise $6 billion in fresh capital after a third quarterly loss.
The FTSEurofirst 300 index <> of top European shares
closed down 0.5 percent at 1,351.25, having risen from a decline
of as much as 1.1 percent as stocks on Wall Street pared losses.
The index has rallied about 13 percent since hitting near
three-year lows in mid-March.
"A bear market rally usually lasts 35 days and (rises) an
average of 12 to 13 percent; that is exactly what we've seen on
the S&P, so this would be it," said Philippe Gijsels, a senior
equities strategist at Fortis Bank in Brussels.
"If this is a bear market rally, it should stop around now,"
he said.
UBS was the largest individual drag on the European market.
The company said it would cut 5,500 jobs in one of the biggest
purges seen so far in the financial markets crisis and also said
it had a preliminary deal with U.S. asset manager BlackRock Inc
<BLK.N> to sell a $15 billion portfolio of subprime mortgages.
UBS shares have virtually halved in value since last June.
The DJ Stoxx banking index <.SX7P> was down 1.2 percent as
shares in HSBC <HSBA.L>, Societe Generale <SOGN.PA> and Credit
Suisse <CSGN.VX> fell between 1.5 and 2.6 percent.
Meanwhile, first-quarter net profit at Swiss Re dropped by
half, a bigger fall than expected, and the world's biggest
reinsurer made fresh credit writedowns of 819 million Swiss
francs ($779.3 million).
Munich Re <MUVGn.DE> shares fell 1.8 percent, while Zurich
Financial <ZURN.VX> lost 1.6 percent, and Allianz <ALVG.DE> and
AXA <AXAF.PA> fell between 1.9 and 2.1 percent.
The European pharmaceutical sector <.SXDP> fell 1 pct, as
drugmaker Shire <SHP.L> slipped 4.6 pct after analysts said data
suggested one of Shire's biggest drug hopes was not capturing as
big a market share as expected.
Roche <ROG.VX>, GlaxoSmithKline <GSK.L> and AstraZeneca
<AZN.L> fell between 2 and 2.4 percent.
Around Europe, Britain's FTSE 100 index <> ended flat,
Germany's DAX index <> dropped 0.5 percent, and France's
CAC 40 <> fell 0.4 percent.
Among major gainers, Tullow Oil <TLW.L> surged 24 percent
after the company said its well offshore Ghana had hit a
significant column of light oil, indicating its Jubilee field in
the area is larger than earlier thought.
The move supported the DJ Stoxx European oil and gas sector
index <.SXEP>, which just managed to resist the overall downward
trend in the market and a slight easing in the price of oil from
a new record high above $120 a barrel.
Total <TOTF.PA> and Royal Dutch Shell <RDSa.AS> were roughly
flat, while BP <BP.L> fell 0.3 percent.
The DJ Stoxx basic resources index, which includes miners
<.SXPP>, rose 2.6 percent in step with firmer precious and base
metal prices. London-listed Xstrata <XTA.L> reported a 2 percent
rise in first-quarter copper output, while nickel production
fell 15 percent. Xtstrata shares rose 2.7 percent.
Rio Tinto <RIO.L> was up 4.1 percent, and BHP Billiton
<BLT.L> rose 3.8 percent.
(Additional reporting by Eva Kuehnen in Frankfurt, editing by
Will Waterman)
