By Amanda Cooper
LONDON, Feb 27 (Reuters) - European shares eased on
Wednesday, after results from British mortgage lender HBOS
<HBOS.L> rekindled concern over funding for banks, while a rally
in commodity prices helped energy and mining shares.
HBOS, Britain's largest mortgage lender, was the
largest-weighted drag on the broader market, falling by nearly 8
percent after posting a 3 percent rise in annual underlying
profit that fell short of analysts' expectations.
A rally in commodity prices on the back of the dollar's fall
to record lows against the euro <EUR=> helped push up shares in
BP <BP.L> and Total <TOTF.PA>, as well as those of miners Rio
Tinto <RIO.L> and Anglo American <AAL.L>
By 0910 GMT the FTSEurofirst 300 index <> of top
European shares was down 0.8 percent at 1,350.82 points. Shares
in Asia and on Wall Street rallied overnight after IBM <IBM.N>
announced a share buyback plan and investors were reassured over
the outlook for the top U.S. bond insurers.
"We have been in a bear market rally since January and this
bear market rally should continue but we're under pressure from
surrounding factors such as the falling dollar and oil at new
all-time highs, that is limiting the upside momentum," said
Commerzbank analyst Achim Matzke in Frankfurt.
Banks were the worst performers on the index, with Royal
Bank of Scotland <RBS.L>, Barclays <BARC.L> and BNP Paribas
<BNPP.PA> down between 1.7 and 3 percent.
CONSTRUCTION DOWN
The construction and materials sector also came under
pressure after France's Bouygues <BOUY.PA>, the telecoms and
construction group, posted a 32 percent rise in full-year
recurring net profit, but earnings fell shy of estimates.
"The earnings were a bit below forecasts," said one
Paris-based trader.
Spain's Grupo Ferrovial <FER.MC> fell 2.1 percent, paring
some of Tuesday's 8.6 percent gain after its results, while
France's Lafarge <LAFP.PA> and Swiss group Holcim <HOLN.VX> fell
1.5 to 1.8 percent.
Holcim, the world's second-largest cement maker, posted an
84 percent rise in 2007 net profit, but some elements of the
results disappointed investors.
The rally in the oil price above $100 a barrel added to
concern over price pressures a day after U.S. data showed an
unwelcome pickup in wholesale inflation at a time when consumer
confidence hit its lowest in five years.
The FTSEurofirst 300 has fallen by 10 percent this year,
largely because of the drop in financial shares as losses from
last year's credit crunch have now run into billions of dollars
and uncertainty grows over the outlook for the U.S. economy.
"Yesterday saw another bad batch of US economic data with
house prices and consumer confidence plunging while
inflationary pressures, as indicated by the PPI report, continue
to rise," said ING analysts in a note.
"While financial markets largely shrugged off these
developments, we suspect that the macroeconomic weakness will
spread and are particularly worried about next week's
ISM manufacturing index and predict another monthly fall in
employment, which markets may have more difficulty to digest."
Federal Reserve Chairman Ben Bernanke speaks at 1500 GMT to
testify on the central bank's semiannual monetary policy report
before the House Financial Services Committee.
Many expect Bernanke to echo comments from Fed Vice Chairman
Donald Kohn on Tuesday who said the danger of the U.S. economy
weakening further was of greater concern than higher inflation.
Among the few gainers within the financial sector was
British insurer Royal & Sun Alliance <RSA.L>, which rallied
about 1 percent after beating forecasts with its results.
Other gainers included StatoilHydro <STL.OL>, the Norwegian
energy group, which missed expectations with its fourth-quarter
results but benefited from the rally in oil prices. Its shares
were up 3.5 percent, ranking it among the top gainers on the
European market.
(Additional reporting by Astrid Wendlandt in Paris; Editing by
Quentin Bryar)
