Europe stocks at six-week low as commodities fall
PARIS - European stocks were down 1.9 percent around midday on Wednesday, falling to a six-week low in a broad retreat led by banking stocks, with energy and mining shares also weaker on easing commodity prices.
At 1155 GMT, the FTSEurofirst 300 index of top European shares was down 1/94 percent at 1,303.31 points, around its lowest since April 24. Declining issues outnumbered advancers by 10 to one.
Shares of energy companies -- among the most resilient so far this year -- were among the biggest losers on Wednesday, as U.S. crude oil futures slid to below $124 a barrel, their lowest level in nearly three weeks on worries over Asian demand and on a stronger U.S. dollar.
Total, BP and Royal Dutch Shell were down between 2.7 percent and 3.3 percent.
"The fact that oil prices have recently dropped almost 10 percent is definitely the trigger of this sell-off," said Alexandre Weinberg, analyst at Petercam.
"We've seen in the press over the past two weeks lots of comments saying oil prices are in a bubble, and now some people are trying to move ahead of what could be a collapse," he said.
"There is definitely a lot of speculation boosting prices, but is it about stop suddenly? I don't know. Supply remains very tight, so I don't think oil prices are about to crash imminently."
The DJ Stoxx energy index is down about 4 percent year-to-date, while the FTSEurofirst 300 has lost 13 percent over the same period.
Remarks on Tuesday by Federal Reserve Chairman Ben Bernanke that the weak dollar was adding to price pressures sparked a rally in the U.S. currency and was seen by some market watchers as a sign that the Fed will not cut interest rates further.
"It's a signal of a stop to Fed rate cuts," said Giuseppe-Guido Amato, equity strategist at Lang & Schwarz brokerage in Duesseldorf, Germany.
Mining shares also declined, falling along with base metal prices, which suffered from the strength in the U.S. dollar and from growing concerns over global economic growth and demand from China and the United States.
Rio Tinto shed 2.2 percent and Anglo American dropped 2.3 percent.
Banking stocks also lost ground, as asset writedown jitters came back to haunt the sector. Banco Santander lost 2 percent, Societe Generale dropped 3.6 percent and Standard Chartered lost 3.4 percent.
JPMorgan, in a research note on continental European wholesale and investment banks, said it expects additional pretax writedowns this year of 3.6 billion euros at Deutsche Bank, 2.1 billion Swiss francs at Credit Suisse, 1.8 billion euros at Societe Generale and 1.4 billion euros at Natixis.
Around Europe, Germany's DAX index was down 1.4 percent, Britain's FTSE 100 index down 1.8 percent and France's CAC 40 down 2.1 percent.
Shares in automakers retreated after dismal U.S. monthly sales data and on a downbeat sector note by Societe Generale, which cited rising raw material prices.
U.S. auto sales tumbled in May as consumers spurned pickup trucks and SUVs in the face of record gasoline prices.
Daimler dropped 2 percent, Fiat lost 3 percent, Peugeot fell 2.1 percent, while tyre maker Continental sank 4.5 percent.