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European shares drop as dealers take profits

Frankfurt, London and Paris had surged by almost 3.5 percent in value on Tuesday after billionaire investor Warren Buffett offered to help US bond insurers hit by a credit squeeze.

‘Yesterday was a very strong day and we are simply seeing some investors cashing in this morning, which is an indicator of just how nervous the market still is,’ one Frankfurt-based trader said.

In recent weeks, global equities have weathered heavy losses largely because of US economic concerns that revolved around the country’s subprime housing crisis and the related worldwide squeeze on credit.

In late morning deals on Wednesday, London’s FTSE 100 index of top companies sank by 1.51 percent to 5,820.50 points.

Frankfurt’s DAX 30 shed 1.27 percent to 6,879.26 points and the Paris CAC 40 lost 0.74 percent to 4,804.83.

The DJ Euro Stoxx 50 index of leading eurozone shares erased 1.12 percent to stand at 3,761.32 points.

The European single currency stood at 1.4556 dollars.

Wall Street ended mixed Tuesday after news of Buffett’s offer to help stricken bond insurers exposed to US home loan troubles.

Japanese stocks also turned in a mixed performance Wednesday ahead of economic data that should shed fresh light on the fallout from the subprime loan crisis, dealers said.

An early Tokyo rally largely fizzled out as investors turned cautious ahead of US retail sales data due out later Wednesday.

In Europe, the metals and mining sector forged lower.

ArcelorMittal, the world’s largest steel company, reported Wednesday a 30-percent jump in annual net profit to 10.36 billion dollars (7.5 billion euros) in 2007.

However, ArcelorMittal’s share price dived 2.97 percent lower to 47.69 euros in Paris.

Elsewhere, German steel group ThyssenKrupp posted lower first-quarter results for its 2007-2008 fiscal year owing to reduced global prices and demand.

Thyssenkrupp’s share price tumbled by 3.09 percent to 33.92 euros in Frankfurt.