By Ana Nicolaci da Costa
LONDON, Feb 22 (Reuters) - European shares were dragged
lower by utilities on Friday after disappointing profits from
Germany's RWE <RWEG.DE>, while heavyweight oil stocks tracked
crude prices lower.
At 0933 GMT, the FTSEurofirst 300 index <> was down
0.8 percent at 1,319.55, having pared gains towards the close on
Thursday when U.S. data showed the weakest reading on
mid-Atlantic manufacturing since 2001, fanning recession fears.
RWE dropped 3.8 percent, making it the biggest percentage
loser on the European index, after the company reported profit
below expectations. German peer E.ON <EONG.DE> lost 2.3 percent
and was the biggest drag on the index.
French utility Suez <LYOE.PA> fell 2.1 percent as newspapers
said it was in talks with private equity firm Terra Firma to
trump an agreed 1.2 billion pound bid for British waste firm
Biffa <BIFF.L>.
Oil shares also fell as crude prices eased further away from
recent record levels around $101 a barrel on the back of rising
U.S. crude and gas stockpiles, which added to evidence of
slowing demand in the world's largest consumer.
BP <BP.L> was down 0.5 percent, Royal Dutch Shell <RDSa.L>
shed 0.9 percent and Total <TOTF.PA> gave up 0.9 percent.
"The problem is you have a slowdown of the economy and in
addition rising oil prices," said Achim Matzke, European stock
indexes analyst at Commerzbank.
"That is why equity markets are cautious. From a technical
point of view the European market is in a bear market."
Renault <RENA.PA> also fell 4 percent after Morgan Stanley
cut its price target on the stock. The bank also cut its rating
on Japan's Nissan <7201.T>, 44 percent owned by Renault. French
peer Peugeot <PEUP.PA> fell 2.7 percent.
LLOYDS RESULTS
Markets have been volatile in recent sessions, grappling
with generally negative news from the financial sector and data
showing the U.S. economy is struggling.
Banks, which have borne the brunt of the fallout from a
crisis in the U.S. subprime mortgage market, were mixed.
Lloyds TSB <LLOY.L> raised the writedown on its exposure to
risky assets to 280 million pounds but a 6 percent rise in
underlying 2007 profit and an increase in its dividend pushed
the stock 3.7 percent higher.
RBS <RBS.L> rose 1.5 percent, France's BNP Paribas <BNPP.PA>
was up 1.2 percent and Germany's Postbank <DPBGn.DE> gained 0.9
percent but Credit Suisse <CSGN.VX> and UBS <UBSN.VX> traded
between 1.2 and 2.4 percent lower.
"This is going to be a Darwin market, survival of the
fittest and strongest," said Justin Urquhart Stewart, strategist
at 7 Investment Management. "The market is looking very short
term. It's very nervous. It can't find any longer-term reason to
push the value up."
UBS <UBSN.VX>, the biggest victim of the credit crisis in
Europe with nearly $18 billion in subprime writedowns, has
contacted some of Europe's top bankers to join its board of
directors and eventually replace the Swiss bank's chairman,
Marcel Ospel, the Financial Times reported.
(Reporting by Ana Nicolaci da Costa; Editing by Paul Bolding)
