(Repeats to correct EasyJet company code in text)
* FTSEurofirst 300 index falls 0.5 percent
* Banks weak amid fears of further writedowns and failures
* Ryanair profit warning hits sector
By Patrizia Kokot
LONDON, July 28 (Reuters) - European shares fell in early
trade on Monday with banks weighing on sentiment amid fears over
more writedowns and failures and airlines struck by a profit
warning at Ryanair <RYA.L> <RYA.I>.
By 0814 GMT, the FTSEurofirst 300 index <> of top
European shares was down 0.5 percent at 1,163.30 points.
Banks were again the heaviest negative weight after U.S.
regulators seized two more financial institutions and sold them
to Mutual of Omaha Bank, making them the sixth and seventh
casualties of the credit crunch.
"I expect there will be more of the little ones going down,"
said Mic Mills, a risk trader at TradIndex. "There is more
hidden stuff which is slowly coming out but whether it is enough
to hit another big bank remains to be seen."
The DJStoxx European banks index <.SX7P> fell 1.3 percent,
with UBS <UBSN.VX> down 2.5 percent and Deutsche Bank
<DBKGn.DE>, which is due to report on Thursday following results
from Deutsche Postbank <DPBGn.DE> on Wednesday, down 1.7
percent.
HBOS <HBOS.L> fell 5 percent following weekend reports that
the bank is due to report more writedowns when it publishes
results on Thursday.
The week is a crucial one for bank earnings, with Santander
<SAN.MC> due on Tuesday and UniCredit <CRDI.MI> on Friday.
Deutsche Postbank fell 2.5 percent after the weekly Focus
magazine said Deutsche Bank was inclined to abandon its bid for
Postbank after studying its books.
A bearish note from Citigroup, which cut its stance on the
European banking sector to "underweight" from "neutral" also
weighed.
"Write-downs, earnings downgrades, dividend cuts and capital
raising are becoming the norm," the broker said in a note.
And a statement from Standard & Poor's on Friday that it may
cut some ratings on Fannie Mae <FNM.N> and Freddie Mac <FRE.N>
further darkened sentiment in the sector.
Around Europe, Britain's FTSE <> was flat, Germany's
DAX <> was down 0.8 percent and France's CAC <> fell
0.6 percent.
PROFIT WARNINGS AND WEAK DATA CONTINUE
Budget carrier Ryanair <RYA.L> <RYA.I> was a major loser
with a 22 percent slump after posting a sharp decline in
quarterly net profit and warning on full-year earnings.
Easyjet <EZJ.L> dived 10 percent, British Airways <BAY.L>
fell 5.7 percent, Air France-KLM <AIRF.PA> lost 2.8 percent and
Lufthansa <LHAG.DE> fell 4.1 percent.
In the Netherlands, Dutch mail company TNT <TNT.AS> lost 8
percent after its second-quarter earnings fell short of
expectations. The group reiterated its 2008 outlook at the lower
end of the range of forecasts.
Concerns about company earnings lingered following shock
warnings from Munich Re <MUVGn.DE>, Daimler <DAIGn.DE> and
Rentokil <RTO.L> last week.
The forward-looking GfK German consumer sentiment fell to
the lowest level in five years amid growing concerns about
inflation and the turmoil in financial markets.
"Growth is likely to have moderated in Q2 and will almost
certainly slow further in the second half of the year as the two
engines of growth - Germany and the manufacturing sector - are
both starting to show signs of weakness," said Elin Ottosson, a
strategist at Cazenove in a note.
Miners rose as metal prices firmed. Rio Tinto <RIO.L>, BHP
Billiton <BLT.L> and Xstrata <XTA.L> all gained between 1.5-2.8
percent.
And Unilever <ULVR.L> lifted food producers after the
world's third-largest consumer goods group said it has agreed to
sell its North American laundry business for $1.45 billion.
British publishing group Pearson <PSON.L> climbed 2.3
percent after issuing a confident outlook after a 38 percent
increase in first-half operating profit.
(Reporting by Patrizia Kokot; Editing by Erica Billingham)
