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Banks push European shares lower; BoE, ECB eyed.

European share prices were mostly lower on Thursday ahead of interest rate decisions by the Bank of England and the European Central Bank, with banks and commodity stocks the biggest losers.

By 0917 GMT, the pan-European FTSEurofirst 300 index of top shares was down 1.2 percent at 972.82 points. The benchmark index has gained nearly 17 percent this year and is up around 50 percent since reaching a record low in early March.

"Even though there have been some good banking figures coming out we are still not finding any particular direction. We are seeing it pull back today," said Justin Urquhart Stewart, director at Seven Investment Management.

"We are waiting to see if there is going to be a decision from the Bank of England. I think there is unlikely to be any change and I do not think the ECB will make any significant changes," he said.

Both, the BoE and the ECB are expected to leave interest rates unchanged. The Federal Reserve stated on Wednesday that it would keep rates close to zero for "an extended period".

Banks took the most points off the index in Europe. HSBC, Banco Santander and UBS were down 1.6 to 2.8 percent.

However, BNP Paribas, the euro zone's second-biggest bank by market capitalisation, gained 1 percent after it posted higher profits that beat market forecasts and trumped the results of many rival banks. In other financials, Swiss insurer Zurich Financial Services lost 3.6 percent after its third-quarter profit missed expectations due to spending on additional hedges.


Commodity stocks featured among the biggest fallers. Petroplus, Europe's largest independent oil refiner, fell 2.6 percent after it missed forecasts with a third-quarter net loss of $259.4 million. BG Group, BP, Royal Dutch Shell and Total were down 0.7 to 1.4 percent as crude slipped 0.7 percent.

Miners were lower as metal prices retreated. Copper was down 0.8 percent, aluminium fell 0.5 percent and nickel lost 0.9 percent.

Anglo American, Antofagasta, BHP Billiton, Eurasian Natural Resources Corporation, Rio Tinto and Xstrata were down 2.3 to 4 percent.

Among other individual movers, British telecoms group Cable & Wireless slipped nearly 7 percent after the company cut its full-year earnings forecast due to weakness in the Caribbean but said stabilising conditions elsewhere would allow it to demerge one of its two divisions. Engineer Invensys slumped 9.5 percent, after weakness in orders at its Operations Management division overshadowed a reiteration that its full-year performance will beat last year's. On the upside, Belgian supermarket group Delhaize gained 4.6 percent after it raised its 2009 forecast for operating profit as third-quarter earnings rose, helped by promotions, cost control and lower transport costs. Across Europe, the FTSE 100 index was down 1.3 percent, Germany's DAX was 1.5 percent lower and France's CAC 40 fell 1.4 percent.

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Publication:Financial Mirror (Cyprus)
Date:Nov 5, 2009
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