By Blaise Robinson
PARIS, May 9 (Reuters) - European stocks dropped in early
trade on Friday, falling more than 1 percent, led by financials
after U.S. insurer AIG <AIG.N> posted a $7.8 billion quarterly
loss, hit by bad credit-related investments.
Adding to the gloom for the financial sector, Citigroup
<C.N> could announce as much as $400 billion of "non-core"
assets are up for sale when it meets with investors and analysts
later in the day, a person familiar with the situation said.
At 0828 GMT, the FTSEurofirst 300 <> index of top
European shares was down 1.2 percent at 1,344.21 points.
Societe Generale <SOGN.PA> fell 2.7 percent, BNP Paribas
<BNPP.PA> dropped 2.3 percent, and Barclays <BARC.L> lost 2.4
percent.
"$400 billion is huge. That is a sign that the banking
sector is heading into some sort of split-up of the banks'
businesses. This Citigroup move might just be the beginning,"
said Marie-Pierre Peillon, head of equity and credit research at
Groupama Asset Management in Paris.
"Over the past weeks, investors got the feeling that the
credit crisis was easing, but a piece of news like that is sort
of a wake-up call that reminds us that the storm is far from
over," she said.
"We think that the peak in writedowns is behind us, but now
the focus is on the banks' solvency and business model."
Insurers were on the downside after AIG, the world's largest
insurer, posted a loss and said it would raise $12.5 billion to
strengthen its balance sheet.
AXA <AXAF.PA> was down 2.5 percent, Aegon <AEGN.AS> down 1.7
percent and Standard Life <SL.L> down 2.2 percent.
"European insurers are much less exposed to toxic
investments than their U.S. peers. We will have to wait until
the second part of 2008 to have a real sense of the damage in
the sector in Europe, but we don't expect the sort of big
surprises AIG unveiled last night," Peillon said.
Allianz <ALVG.DE> was down 1.3 percent. Allianz's Dresdner
Bank posted a quarterly loss after writing down 845 million
euros on structured finance investments.
Sanofi-Aventis <SASY.PA> dropped 4 percent after
Schweizerhall, a generic drug company based in Basel, said it
was close to winning approval for a generic version of
Sanofi-Aventis's <SASY.PA> blockbuster blood-thinning drug
Plavix in Germany.
A spokesman for Sanofi said Plavix was protected in Europe
by its patent until 2013.
Around Europe, Germany's DAX index <> was down 1.2
percent, UK's FTSE 100 index <> down 1.2 percent and
France's CAC 40 <> down 2.1 percent.
European car makers were also on the downside after Toyota
Motor Corp <7203.T>, the world's biggest automaker, forecast its
first decline in annual net profit in seven years.
Peugeot <PEUP.PA> was down 2 percent and Daimler <DAIGn.DE>
down 1.6 percent.
