(Updates prices, adds Infineon comment in last two paras)
By Blaise Robinson
PARIS, April 23 (Reuters) - European stocks were down around
midday on Wednesday as fresh worries over the banking sector
eclipsed buoyant commodity-related stocks and prompted the
market to surrender early gains.
Data showing a plunge in U.S. mortgage applications last
week also fuelled concerns over the housing slump.
At 1219 GMT, the FTSEurofirst 300 <> index of top
European shares was down 0.7 percent at 1,296.12 points.
The index has lost 14 percent so far this year as signs of a
U.S. economic slowdown and a string of huge asset writedowns by
banks have rattled investors.
Banks, hit by market talk of more writedowns and still under
pressure following a massive rights issue unveiled by Royal Bank
of Scotland <RBS.L> on Tuesday, were the top losers, with RBS
down 6.2 percent, Banco Santander <SAN.MC> down 2.9 percent and
UBS <UBSN.VX> down 3.4 percent.
Adding to the gloom, U.S. bond insurer Ambac Financial Group
Inc. <ABK.N> posted a first-quarter loss after losses of $1.73
billion on its exposure to credit derivatives, bringing its net
loss per share to $11.69, compared with Reuters estimates for a
per-share loss of $1.82 in the first quarter.
"It's having a ripple effect on the rest of the sector,"
said one London-based trader. "People are more immune to
writedown news but certainly headlines like these don't help."
Pharmaceuticals stocks were among the biggest gainers, with
AstraZeneca <AZN.L> up 2.3 percent and Novartis <NOVN.VX> up 1.4
percent. GlaxoSmithKline <GSK.L>, which posted a 5 percent drop
in quarterly earnings, was up 0.2 percent.
"Investors are prudent. It's a wait-and-see game as
corporate results are coming out. We already got about a third
of U.S. results for the quarter, and see that the "good
surprises" ratio is a bit lower than what we normally get, while
the "negative surprises" ratio is higher, which is common when
the economy slips into recession," said Vafa Ahmadi, fund
manager at CPR Asset Management, in Paris.
"The lack of visibility on the growth outlook and concerns
over the credit crisis are holding investors at the moment. But
since the Bear Stearns bailout, the mood has improved as people
saw the Fed sending a signal that there will be no systemic
crisis. The fear of a domino effect has diminished greatly."
Belgian drugmaker UCB <UCB.BR> soared 21 percent after
receiving a key regulatory approval for its Cimzia drug about a
year earlier than expected.
Energy stocks rose on strong oil prices. U.S. crude oil
futures <CLc1> eased under $118 on Wednesday, but were still
within sight of an all-time peak of $119.90 reached on Tuesday.
Total <TOTF.PA> gained 1.1 percent and Royal Dutch Shell
<RDSa.L> added 1.4 percent.
Germany's DAX index <> was down 0.6 percent, the UK's
FTSE 100 index <> down 0.7 percent and France's CAC 40
<> down 0.1 percent.
Shares in Infineon <IFXG.n.DE> rose 3.9 percent after the
Financial Times Deutschland reported the company was in talks
with rivals Micron <MU.N>, Hynix <000660.KS> and Elpida <6665.T>
to sell its 77 percent stake in Qimonda, while traders said
Infineon itself could be the target of a private equity takeover
attempt.
Infineon, which has said it is "evaluating its different
alternatives", declined to comment. However, Chief Executive
Wolfgang Ziebart told analysts on a conference call he had had
no recent discussions with private equity.
(Additional reporting by Amanda Cooper in London; editing by
Elaine Hardcastle)
