By Rebekah Curtis
LONDON, July 7 (Reuters) - European stocks teetered either
side of unchanged on Monday, with banks reversing an early rally
to lead losers, partially eclipsing a bounce in energy shares.
Banks <.SX7P> saw Royal Bank of Scotland <RBS.L> fall 4.4
percent following a downgrade from Cazenove, ranking as the
second-biggest individual negative weight on the market.
At 0913 GMT, the pan-European FTSEurofirst 300 index
<> was 0.06 percent higher at 1,163.83, having earlier
rallied as much as 1.06 percent driven by banks' initial gains.
The index shed 2.4 percent the previous week to mark a fifth
consecutive week of losses.
UBS <UBSN.VX> and Credit Suisse <CSGN.VX> dropped 3.1 and
1.6 percent aftera Swiss weekly, citing lawmakers, said on
Sunday that Swiss authorities could require the two banks to set
aside an additional 70 billion Swiss francs ($68.29 billion) in
capital. []
"The credit crisis is being worked through but isn't over,"
said Andrew Bell, head of research at Rensburg Sheppards in
London.
"And you've got an economic downturn which is being given an
extra twist from the (high) oil price, so there are earnings
downgrades on the way and it's much easier to come up with a
negative story on equities in the near term than a positive
one."
The banking sector, as reflected by the DJStoxx index of
European banks, fell by nearly 4 percent last week, marking its
ninth consecutive weekly fall.
Energy shares <.SXEP> shrugged off softer oil prices, adding
0.8 percent after the sector shed 3 percent the previous week.
BP <BP.L>, Royal Dutch Shell <RDSa.L> and Total <TOTF.PA>
added 1-1.4 percent. Inflation concerns were eased slightly by
oil prices pulling away from the previous week's record highs to
trade below $143 a barrel.
"I'd rather be buying the oil stocks than the oil price at
the moment," Bell said, adding that "$140 is no way priced in"
within the sector and that crude prices could fall back.
"It's recession first, oil price crack after," he added.
Around Europe, Britain's FTSE 100 <> was flat, up just
0.03 percent and paring earlier strong gains after data showed
British industrial output fell much more than expected in May.
Germany's DAX <> and France's CAC-40 <> both put
on 0.4 percent.
CARPHONE JUMPS
Leading the FTSE 100 gainers, Carphone Warehouse <CPW.L>
added 4.5 percent after Goldman Sachs added the stock to its
"pan-European buy list".
Britain's AMEC <AMEC.L> added 3 percent after Citigroup
upgraded the stock to "buy" from "hold".
Leading the percentage losers in Europe, Fresenius SE
<FREG.DE> dropped 8.1 percent as the cost of insuring debt of
the German health care group against default rose after the
company said it plans to buy APP Pharmaceuticals <APPX.O> for
$3.7 billion. []
Marks & Spencer fell 4.5 percent as JPMorgan and Panmure cut
their price targets on the stock after the retailer issued a
profit warning the week before.
Heineken <HEIN.AS> fell 2.9 percent after the Sunday
Telegraph said the Dutch brewer was set to restate profit for
newly acquired Scottish & Newcastle by as much as 10 percent,
after finding discrepancies in its accounts. For more, see:
[]
Miners also dragged on the market as gold prices dipped in
line with a firmer dollar <.DXY>, with Rio Tinto <RIO.L> down
3.1 percent, BHP Billiton <BLT.L> off 2.8 percent and Xstrata
<XTA.L> dropping 1.8 percent.
(Editing by Rory Channing)
