Banks and insurers push bourses lower

Banks and insurers pushed European markets lower on Tuesday morning, as investors consolidated recent gains.

Bourses were also taking in a report in The Times that the International Monetary Fund would announce toxic assets could reach a bigger-than-expected $4000bn.

The pan-European FTSE Eurofirst 300 lost 1.1 per cent to 757.56; France's CAC 40 fell 1.4 per cent to 2,889.71; the German Dax fell 1.2 per cent to 4,928.37.

Commerzbank, the German bank, was suffering not only from the wider sector's woes but also reports it was planning to sell its Eurohypo subsidiary in order to gain European Commission approval for state aid, which is pending. Its shares fell 3.4 per cent to €4.31.

Peer Deutsche Bank also fell, 5.2 per cent to €33.44, while BNP Paribas was one of the worst performing stocks on the CAC 40, with a 5.1 per cent fall to €33.10. Societe Generale was also down, 4 per cent to €32.80.

Metals and mining stocks were apprehensive as they anticipated the publication of Alcoa's first quarter results. The aluminium maker will be the first US company to report – the bellweather stock is likely to give an indicator of what can be expected from others.

"It will be difficult to put a positive spin on the pending results season. Bottom-up estimates for US first-quarter results are running at around -37 per cent, and this time around the non-financial sector seems set fully to share the pain," said HSBC analysts.

Eramet, the French miner, fell 5.8 per cent to €169.80, while ArcelorMittal, the world's biggest steelmaker, lost 5 per cent to €17.21.

The defence sector was boosted by plans on Monday by Robert Gates, US Defense Secretary, to change priorities and concentrate on "irregular warfare".

EADS, the Franco-German aerospace and defence group, was further buoyed by securing assurances from clients that they would not cancel any orders for its A400M Airbus for the next three months – EADS gained in early trade to then lie flat at €9.60 on the news.

Meanwhile, Italy's Finmeccanica, whose subsidiary AgustaWestland will be affected by the cancellation of a helicopter order by Mr Gates, nonetheless gained 1.6 per cent to €9.69.

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