Barclays leads London banks lower as European banks decline

European equities markets were lower on Tuesday as concerns returned that the debt crisis in some nations in the region could hurt economic recovery around the world.

Banks all over the region declined on analyst comment that a default by even one nation could destroy trust in all banks.

London banks were lower, led by a 2.57 percent decline for Barclays Bank (LSE: BARC), while the biggest declines in the region came for National Bank of Greece (Athex: ETE) and EFG Eurobank Ergasias (Athex: EUROB), which were each down 7.1 percent.

In Ireland, Allied Irish Banks Plc (ISEQ: ALBK) fell 5.8 percent while Bank of Ireland (ISEQ: BKIR) was 5.9 percent lower as brokers downgraded both from “outperform” to “neutral”, while in Spain Banco Santander (BMAD: SAN) was down 1.7 percent and Banco Bilbao Vizcaya Argentaria (BMAD: BBVA) dropped 2.2 percent.

In France, BNP Paribas (Euronext: BNP) was 2.2 percent lower and Societe Generale (Euronext: GLE) was down 3.9 percent.

The FTSE 100 and FTSE 250 each fell 0.58 percent on the session in London, to 5,407.82 and 10,181.27 respectively.

Engineering group Invensys (LSE: ISYS) added 7.42 percent to lead gains on the 100 on reports that it could be targeted for takeover by several firms, while software maker Micro Focus International (LSE: MCRO) added 5.55 percent and was the biggest gainer on the 250 after in announced that it has appointed a new chief financial officer, effective immediately.

The biggest decliner in London was outsourcers Xchanging (LSE: XCH), which fell 6.48 percent to lead declines on the 250, while investment managers Man Group (LSE: EMG) dropped 4.12 percent for the worst performance on the 100.

British Airways (LSE: BAY) added 2.81 percent after its CEO said he was willing to resume merger discussions with Australian air carrier Qantas Airways (ASX: QAN) if it is interested.

Elsewhere in the travel and leisure sector, pubs operator Enterprise Inns (LSE: ETI) was the biggest decliner, falling 2.35 percent, while TUI Travel (LSE: TT) dropped 1.63 percent after Goldman Sachs downgraded it from “buy” to “neutral”.

Most miners and most in the energy sector were lower on declines in copper and some crude oil prices, with miners having trouble after Australia formed a new government with Julia Gillard continuing as prime minister on concerns that a proposed mining tax there will go forward.

The FTSE Eurofirst 300 was down 0.38 percent to 1,061.73 while the Dax fell 0.6 percent after factory orders were reported down unexpectedly in July in Germany, the CAC-40 was 1.11 percent lower to 3,643.81 and the IBEX dropped 1.35 percent to 10,479.1.

Markets in the Asia-Pacific region were mixed Tuesday, with steelmakers in the region higher after US President Barack Obama proposed creation of an “infrastructure bank” and asked for money to repair and rebuild 150,000 miles of roads, 4,000 miles of rails and 150 miles of runways.

Steel Authority of India (BSE: 500113) added 0.8 percent in Mumbai while Australia’s BlueScope Steel Ltd (ASX: BSL) was up 1.3 percent, JFE Holdings (TYO: 5411) was 2.4 percent higher in Tokyo, Angang Steel Co (SEHK: 0347) added 3.8 Hong Kong, South Korea’s Posco (KRX: 005490) was up 4.5 percent and Hong Kong shares of China’s Maanshan Iron and Steel Co (SEHK: 0323) gained 5.7 percent.

Tokyo’s markets were mixed as the Nikkei 225 dropped 0.81 percent to 8,226 and the Topix index fell 0.45 percent to 834.91, but the Mothers market added 0.51 percent to 380.22 after the Bank of Japan held interest rates steady but left open the question of whether it would take emergency steps to help the economy there.

Many exporters were hurt as the yen strengthened.

Automobile manufacturer Honda Motor (TYO: 7267) was down 1.4 percent while Nissan Motor (TYO: 7201) fell 1.8 percent.

Video games maker Nintendo (TYO: 7974) was down 1 percent on the Osaka exchange, while among semiconductors-related shares Advantest (TYO: 6857) fell 1.8 percent while Elpida Memory (TYO: 6665) dropped 3 percent.

Other decliners in the region included Australia’s markets, which fell after the Reserve Bank of Australia held interest rates there at 4.5 percent, as the S&P/ASX200 was down 0.05 percent to 4,573.2 and the Sydney Ordinaries dropped 0.06 percent to 4,613.

The Taiex was 0.08 percent lower to 7,884.4 in Taiwan while South Korea’s Kospi fell 0.26 percent to 1,787.74.

The Straits Times Index, on the other hand, added 0.05 percent to 3,036.09 in Singapore while the Shanghai Composite was up 0.08 percent to 3,698.36, the Hang Seng was 0.22 percent higher to 21,401.79 in Hong Hong and India’s Sensex gained 0.46 percent to 18,645.06.

Wall Street was lower in midday trade in New York as investors worried about the slide in European banks, with the Dow Jones Industrial Average down 0.77 percent to 10,367.03 while the S&P 500 fell 0.85 percent to 1,095.14 and the Nasdaq Composite was 0.87 percent lower to 2,214.34.

Crude oil prices were mixed, with West Texas Intermediate crude down in New York but Brent crude was higher in London.

Copper and silver both traded lower at midday in New York, but gold was up $8 to $1,259.10 per troy ounce, above the record close of $1,258.30 per troy ounce in June, while it traded even higher earlier in the session at $1,261.60 per troy ounce.

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