By Eva Kuehnen
FRANKFURT, Jan 9 (Reuters) - European shares hit a
seven-week low on Wednesday driven by retail stocks after
Britain's Marks & Spencer <MKS.L> reported its worst quarterly
performance in two years and as worries about a U.S. recession
intensified.
Britain's largest clothing retailer fell almost 20 percent
after it reported that like-for-like sales at its UK stores fell
2.2 percent in the third quarter to Dec. 29, adding to signs of
a slowdown in British consumer spending.
The DJ Stoxx index of European retailers <.SXRP> fell 5.2
percent, making it the worst performing sector in Europe. It has
fallen 8.5 percent since the beginning of the year, after
dropping of 11.5 percent in 2007.
By 0944 GMT, the pan-European FTSEurofirst 300 index
<> was down 1.4 percent at 1,446.88 points, erasing the
previous days gains and temporarily hitting its lowest level
since November 22.
Investors are becoming increasingly nervous amid mounting
signals that problems in the global credit market, which led to
a worldwide equity sell-off in recent months, have begun
filtering through to the real economy.
On Wednesday, data also showed that German retail sales
unexpectedly fell by 1.3 percent in November, their second
consecutive monthly drop, suggesting household spending was a
drag on overall growth in the last quarter of 2007.
"There is certainly some profit taking involved as market
players are trying to build up a cushion," said Klaus Schruefer,
head of investment strategy at SEB.
Sectors affected by insipid company news or macro data --
cyclical stocks in general -- would be the worst hit, he said.
On Tuesday, U.S. phone company AT&T <T.N> warned of soft
consumer spending, sending its shares down 4.8 percent and
triggering a new wave of recession fears.
U.S. benchmark equities indexes <> <.SPX> <> fell
between 1.8 percent and 2.4 percent.
Banking shares, which have borne the brunt of the global
credit market turmoil, chalked up losses again with Barclays
<BARC.L> falling 3.3 percent, Royal Bank of Scotland <RBS.L>
down 2.4 percent and Credit Suisse <CSGN.VX> down 2.5 percent.
Oil shares also weighed with BP <BP.L> down 3 percent, Total
<TOTF.PA> down 0.8 percent and Royal Dutch Shell <RDSa.L>
shedding 0.6 percent.
Around Europe, Britain's FTSE 100 index <> fell 1.4
percent, dragged down by heavy declines in some of Europe's
largest retailers, such as Tesco <TSCO.L>, Marks & Spencer,
Sainsbury <SBRY.L> and Morrison <MRW.L>
Germany's DAX index <> fell 0.8 percent and France's
CAC 40 <> dropped 1.2 percent.
Investors preferred defensive stocks like utilities and
pharmaceuticals with E.ON <EONG.DE> shares gaining 1.1 percent
and Switzerland's drug giants Novartis <NOVN.VX> and Roche
<ROG.VX> up 0.8 percent and 0.4 percent respectively.
(Editing by David Cowell)
