By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares dropped on Monday, with every sector under pressure, as markets remained jittery after last week's news of Dubai debt woes.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP 240.45, -2.15, -0.89%) declined 1.1% to 239.91, marking the second day of losses in four sessions.
The index lost 0.4% overall last week although the period encompassed big daily moves, with Dubai's debt troubles roiling markets on at the end of the week. Read story on Dubai stock move.
"The market reaction was savage, with risk measures blowing out and asset prices falling sharply," said strategists at Commerzbank.
In New York on Friday, crude-oil futures lost more than 2%. Energy firms were trading lower in Europe on Monday with oil giant BP (UK:BP. 577.50, -5.90, -1.01%) (BP 58.11, -1.11, -1.87%) shares down 1.1% and natural gas producer BG Group (UK:BG. 1,106, -20.00, -1.78%) down 2%. See full story.
"For the last six months, markets have been trading on the basis that the worst of the crisis is behind us and that there were no more big skeletons waiting to fall out of the cupboard," the strategists added.
"Risk measures may well remain elevated in the run up to year-end, trading volumes will be thinner and markets will struggle to maintain any upward momentum," they added.
Equity strategists at Credit Suisse said that they doubt that the issues from Dubai will spread further but that a number of factors suggest a period of consolidation for equities is due.
"We still remain overweight equities strategically as we believe that the growth/inflation trade-off will be better than expected," they said.
On a regional level, the German DAX index (DX:DAX 5,644, -41.75, -0.73%) declined 1% to 5,628.56, the French CAC-40 index (FR:PX1 3,690, -31.47, -0.85%) lost 1.1% to 3,680.54 and the U.K. FTSE 100 index (UK:UKX 5,213, -33.13, -0.63%) fell 0.8% to 5,203.30.
Asian markets made strong gains, while U.S. stock futures were pointing to mild losses on Wall Street. See full story.
Stocks in Dubai lost around 8% in its first day of trade since the outset of the crisis. See full story.
In the financial sector, shares of ING Group (NL:INGA 6.28, -0.27, -4.08%) (ING 9.84, -2.44, -19.87%) dropped 4.6% in Amsterdam as the firm's shares started to trade without the right to participate in the firm's plans to sell shares to raise cash.
It intends to participate in the government's National Asset Management Agency and said that not taking part in the program would likely result in the partial or full nationalization of the bank.
Rival Bank of Ireland (IE:BIR 1.62, -0.09, -5.00%) (IRE 10.06, -0.28, -2.71%) , down 3.7%, also said that its court of directors will recommend participation in the National Asset Management Agency and said that, if the discount on assets transferred to the scheme was 30%, it would book a loss of 3.4 billion euros ($5.1 billion).
In the auto sector, BMW (DE:BMW 31.49, -0.78, -2.42%) shares fell 2.3% after it was downgraded at Goldman Sachs, with the broker saying other car makers have more potential upside.
It reinstated coverage of Volkswagen (DE:VOW3 55.73, +1.18, +2.16%) (DE:VOW 84.79, -0.21, -0.25%) , with the firm's preference shares up 2.3% on Monday, and Porsche (DE:PAH3 47.64, +0.19, +0.40%) , up 1.3%, at buy, with Volkswagen also being added to the conviction-buy list.
