Lloyds Banking Group sets share-offer price at 37 pence
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares weakened on Tuesday, with banks leading the decline after a report from ratings agency Standard & Poor's raised worries about capital levels in the sector.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP 248.43, -0.06, -0.02%) fell 0.3% to 247.65, down for the fifth time in six sessions. It closed with a 2% gain on Monday.
The report from Standard & Poor's on the banking sector discussed the capital strength of lenders using a risk-adjusted capital ratio developed by the agency.
UBS (CH:UBSN 16.18, -0.31, -1.88%) (UBS 16.21, +0.26, +1.63%) , down 2.1%, BBVA (ES:BBVA 12.95, -0.09, -0.69%) (BBV 19.38, +0.45, +2.38%) , down 1.2%, and Allied Irish Banks (IE:AIB 1.70, -0.05, -2.64%) , down 2.5%, were among the lenders with the lowest risk-adjusted capital ratios, according to the report.
Overall, the French CAC-40 index (FR:PX1 3,801, -12.26, -0.32%) declined 0.2% to 3,805.49, the German DAX index (DX:DAX 5,801, -0.12, -.00%) lost 0.1% to 5,794.95 while the U.K. FTSE 100 index (UK:UKX 5,369, +13.06, +0.24%) traded flat at 5,357.18.
In Asian trading, Chinese shares also were hit by bank capital concerns, with the Shanghai Composite Index ending the day down 3.5%.
"A poor performance by Asian equity markets despite [the S&P 500] edging towards the yearly highs as well as some very early year-end position squaring have served to keep the U.S. dollar -- if not buoyant overnight -- at least in a position to tread water ahead of today's big data which is likely to be the U.S. GDP number," said foreign exchange strategists at Icap.
U.S. stock futures edged slightly higher.
On the economic front in Europe, the Ifo Institute's closely watched indicator of German business sentiment rose to its highest level in more than a year in November, boosted by a more positive outlook on exports and an improving view of the current business situation. Read more on Ifo.
The euro traded down 0.1% to $1.4945 against the greenback, while sterling lost 0.5% to $1.6522.
Gold futures and miners staged a turnaround through the morning, with the precious metal up $6.00 at $1,170.80 in electronic trading and Anglo American (UK:AAL 2,665, +63.00, +2.43%) shares up 2% in the mining sector.
Carrefour (FR:CA 32.52, +0.97, +3.06%) shares rose 3.4% to 32.62 euros after J.P. Morgan upgraded the French supermarket group to overweight from neutral on Tuesday and added it to its analyst focus list.
"We believe there is an 80% probability of a successful turnaround," the broker said and upped its target price to 40 euros a share, from a previous level of 33 euros.
"We view positively CEO Lars Olofsson's decision to undertake a profound category review," it added.
The broker believes that the worst of the deflationary cycle has passed and that the comparison base is set to get much easier.
It also believes there is a 20% probability of a partial break-up of the group, which it estimates would lead to a value of 52 euros a share.
Shares of Lloyds Banking Group (UK:LLOY 92.75, +1.21, +1.33%) (LYG 6.03, +0.22, +3.79%) managed to buck the lower banking sector trend, rising 1.3% after the lender priced its record 13.5 billion pound ($22.3 billion) share sale at 37 pence a share. Read more on Lloyds pricing.
Elsewhere, shares of Legrand (FR:LR 18.69, -1.22, -6.11%) fell 6.3% after Kohlberg Kravis Roberts & Co. and Wendel (FR:MF 41.05, +0.78, +1.92%) said that they will jointly sell 30 million shares, or 11%, of the electrical fittings firm.
Wendel shares rose 1.3% while KKR fell 0.3% in Amsterdam.
