By Amanda Cooper
LONDON, May 26 (Reuters) - European shares fell on Monday as
a rise in oil and energy stocks was offset by a decline in
banks, with UBS <UBSN.VX> under renewed pressure. UK and U.S.
markets remained closed for public holidays.
Crude oil prices <CLc1> holding above $130 a barrel
continued to put pressure on global equities as concerns for the
spread of inflation persisted, depressing the dollar.
The Amsterdam-listed shares of Royal Dutch Shell <RDSa.AS>
were up 0.3 percent, while shares in France's Total <TOTF.PA>
were flat and Italy's ENI <ENI.MI> rose 0.3 percent.
The rise in the price of oil aggravated existing worries
among investors over inflation and stripped more than 2 percent
off Japan's Nikkei <> and pushed Wall Street stocks last
week into their worst weekly slide in three months.
The FTSEurofirst 300 index <> of top European shares
was down 0.2 percent at 1,319.81 points at 0810 GMT, following a
1.7 percent fall on Friday that brought last week's decline to
3.2 percent.
"Oil is key for future developments in the short term," said
FrankfurtFinanz strategist Heino Ruland, adding OPEC
Secretary-General Abdullah al-Badri's reiteration on Friday that
runaway oil prices are caused by market speculation and not by
supply issues would likely push crude futures higher and further
hinder equities.
"That could be in itself a driver for the oil price in the
wrong direction, north instead of south, which will have a
negative impact on the dollar and this will ... reduce growth
expectations and talk of stagflation will do the rounds."
BANKS DOWN AGAIN
Banks were the worst performing sector. The DJ Stoxx index
of European banks <.SX7P> lost 0.5 percent, led by a decline in
shares of UBS <UBSN.VX>, which shed nearly 3 percent ahead of
the stock trading ex-rights on Tuesday, Swiss-based dealers
said.
Also, in the company's prospectus for its upcoming $15
billion rights issue on its website, the bank says it "continues
to hold positions exposed to the United States residential
mortgage market and may record additional losses to such
exposures".
UBS is Europe's largest subprime casualty so far, having
written down $37 billion of assets hit by the U.S. subprime
lending crisis.
Banco Santander <SAN.MC> lost 0.7 percent, while UniCredit
<CRDI.MI> fell 1.3 percent and Credit Suisse <CSGN.VX> lost 0.8
percent.
Many of the banking index's heavyweights such as HSBC
<HSBA.L>, Royal Bank of Scotland <RBS.L> and Barclays <BARC.L>
were not trading because of the public holiday in Britain.
Outside the banks, shares in Nokia <NOK1V.HE> fell 1.3
percent following market talk in Asia of the Finnish mobile
phone maker cutting handset prices and re-entering South Korea
later this year.
Nokia shares were among the largest individual drags on the
broader European market. Shares in South Korea's LG Electronics
<066570.KS> and Samsung Electronics <005930.KS> fell in Seoul as
talk circulated of a cut of up to 20 percent in the price of
Nokia handsets.
Shares in French utility Suez <LYOE.PA> were among the top
gainers, rising 1.4 percent after the company said it was
looking to sell its Belgian natural gas trading arm Distrigas
<DISTy.BR>. The company said on Saturday it had entered into
exclusive talks with Italy's Eni <ENI.MI>.
"It looks as if the sale of Suez's stake in Distrigas will
happen very soon," said KBC in a note, adding that a solution
could materialise by May 29.
"The CEO of ENI, Paolo Scaroni, last week offered Eni's gas
supply business in Rome in return. Since Electrabel is already
strong in the electricity market around Rome, this could be an
interesting swap."
Eni shares were up 0.6 percent.
Around Europe, Frankfurt's DAX <> was flat, while
Paris' CAC 40 <> was up 0.1 percent, and the Swiss blue
chip SMI index <> was down 0.8 percent, making it the worst
performer among Western Europe's 16 major national benchmarks.
Volumes were relatively high, given that public holidays in
Britain and the United States can often restrict turnover.
The DJ Euro Stoxx50 index of top euro zone shares
<> was down 0.1 percent on about 23.5 million shares of
turnover, equivalent to about 25 percent of the 30-day daily
average.
(Editing by Greg Mahlich)
