By Amanda Cooper
LONDON, May 15 (Reuters) - European shares were about flat
on Thursday reflecting a mixed financial sector picture, in
which Britain's Barclays <BARC.L> made a $1.95 billion writedown
but France's Natixis <CNAT.PA> produced a smaller than expected
fall in profits.
Barclays shares fell by 2.2 percent in early trade,
reversing an early gain, after the firm refused to rule out a
rights issue.
By 0927 GMT the FTSEurofirst 300 index <> of top
European shares was down 0.1 percent at 1,353.98 points. The
ratio of falling stocks to advancers was about one to one.
"On the financial side, we've seen a certain amount of
improvement, but the underlying newsflow still contains a lot of
negative items which in sum, do still paint the picture that in
the U.S., the consumer is under significant pressure and will
contribute to a less favourable environment in the months to
come and that of course has repercussions for equities," said
Tammo Greetfeld, a European equity strategist at UniCredit in
Munich.
Barclays writedown is smaller than those of some rivals, but
its capital cushion remains thin compared to other European
banks, especially after Royal Bank of Scotland <RBS.L> and HBOS
<HBOS.L> unveiled big rights issues.
"The real crux of the market's interest remains the group's
capital position. Today's statement does little to assuage any
concerns regarding the likelihood of a rights issue, with the
company insisting on keeping the door ajar," said Richard
Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers.
"It maintains that it will continue to monitor all options
and will clearly not be drawn on speculation as to what form
this capital injection might take."
Banks took a net 2.5 points off the FTSEurofirst. Royal Bank
of Scotland <RBS.L> fell 2.7 percent, while HSBC <HSBA.L> was
down 0.8 percent. BNP Paribas <BNPP.PA> and UniCredit <CRDI.MI>
fell between 1.2 and 1.3 percent.
Belgian banking and insurance group KBC <KBC.BR> reported a
27-percent fall in first-quarter underlying net profit and
temporarily suspended its share buyback programme, which sent
its shares down 7 percent, ranking them among the largest
weighted drags on the broader market.
Among the few gainers in the banking sector were French
banks Natixis <CNAT.PA> and Credit Agricole <CAGR.PA>, which
both delivered trading updates.
Natixis shares rose by more than 10 percent after France's
fourth-biggest listed bank reported an 88 percent fall in
first-quarter net profit but avoided posting a loss as some
analysts had feared.
Credit Agricole rose 0.5 percent after saying it would sell
assets and restructure its Calyon investment banking arm. It
confirmed a 5.9 billion euro ($9.1 billion) rights issue.
The DJ Stoxx index of European banking shares <.SX7P> was
down about 0.8 percent. The index has fallen by 15 percent so
far this year, and contributed to the 11 percent slide in the
FTSEurofirst, which has lost nearly 20 percent since hitting
multi-year highs last July as the credit crunch unfolded.
The most recent inflation data out of both Britain and the
United States suggests central bankers have a lot less scope to
deliver rate cuts, which are usually supportive to equities and
banks in particular.
Around Europe, London's FTSE 100 <> and Frankfurt's DAX
<> and France's CAC-40 <> were all down 0.4 percent.
The DAX did not get much of a boost from German GDP figures
that showed the strongest pace of growth since 1996 in the first
quarter, which gave the euro a boost.
Other major movers included mining stocks Rio Tinto <RIO.L>
and BHP Billiton <BLT.L>, which retreated by 2.1 to 2.3 percent
after hitting record highs this week.
German chemical and drugs group Bayer <BAYG.DE> was the top
negative weight on Frankfurt's DAX <> after U.S.
regulators said on Wednesday the company was removing remaining
supplies of its heart-surgery drug Trasylol from the U.S. market
after a long-awaited study found it raised the risk of death
compared to two alternatives.
Bayer shares were down 1.5 percent.
Construction group Hochtief <HOTG.DE> was among the top
postive influences on Frankfurt's MDAX <.MDAXI> midcap index,
rising by more than 4 percent after the company posted solid
results that beat forecasts.
Zurich Financial <ZURN.VX> was among the largest positive
weights on the broader European market, rising 2.9 percent after
beating expectations with its first-quarter results, while
continuing to cut costs.
(Editing by Andrew Callus)
