Interest rate fears affect European markets

In Europe on Tuesday, the FTSE Eurofirst 300 declined by 2.2 percent to close at 1,293.39. Banks saw substantial losses, as did several other key sectors.

Automobile manufacturers were down on the day. DaimlerChrysler, Porsche, and Volkswagen each declined by 2.2 percent. Porsche’s losses were in consequence of a reiteration by Citigroup of its “sell” rating on the carmaker, its setting of a target share price of €690, and its criticism of Porsch’s recent acquisition of a stake in Volkswagen. Porsche’s shares ended the day at €754.97, while Volkswagen closed at €54.82 and DaimlerChrysler ended the session with its shares trading at €40.38. Elsewhere in the sector, BMW dropped 2.3 percent to €40.03 and Renault was down 3.1 percent to €87.75.

Utilities also took a hit on the day. Amid reports that France will attempt to retain state regulation of the price of gas and electricity after market liberalization next year in order to gain the approval of parliament for the merger of Gaz de France and Suez, Gas de France dropped 1.4 percent to €26.05 and Suez was down 3.5 percent to €29.50. In addition, Electricite de France declined by 3.7 percent to €41.31.

In the banking sector, Swiss private bank Julius Baer was down 5.3 percent to SFr105.30. National Bank of Greece did almost as badly, dropping 5.2 percent to €31.30. Commerzbank declined by 4 percent to €28.87 even though it said that rumors that it has recently suffered large derivatives losses are false. Meanwhile in Belgium, KBC lost 3.6 percent to €83.55 even though it’s quarterly report was more positive than had been expected and it received an upgrade from “add” to “buy” from West LB.

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