LONDON (MarketWatch) - European shares weakened on Monday, as shares of banks such as Barclays fell and airlines again took the brunt of crude prices trading near record highs.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP: news, chart, profile) fell 0.6% to 308.34, with the banking sector showing the sharpest decline in percentage terms. It was down 1.8% at last check.
Of banks posting losses, shares in Barclays (BCS:Barclays PLC
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Last: 26.43-2.52-8.70%
4:00pm 06/06/2008
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BCS 26.43, -2.52, -8.7%) (UK:BARC: news, chart, profile) fell 1.3%.
The U.K. banking giant, which has faced pressure over its capital position, is seeking to raise cash from overseas sovereign wealth funds, the Sunday Telegraph reported. See full story.
In a similar vein, investors will be paying close attention to Lehman Brothers at the start of the week after reports the company may announce its second-quarter results ahead of schedule and unveil a plan to raise additional capital. See full story.
Other banks under pressure included UBS (UBS:UBS Ag
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Last: 23.91-1.49-5.87%
4:01pm 06/06/2008
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UBS 23.91, -1.49, -5.9%) (CH:002489948: news, chart, profile) , down 3.6%, and Commerzbank (DE:803200: news, chart, profile) , down 1.6%.
Of national indexes, the German DAX 30 index (DX:1876534: news, chart, profile) fell 0.5% to 6,773.61, the French CAC-40 index (FR:1804546: news, chart, profile) declined 0.3% to 4,782.51 and the U.K. FTSE 100 (UK:UKX: news, chart, profile) index lost 0.2% to 5,896.50.
Lehman Brothers on Monday shifted its stance on European stocks to underweight from overweight and increased its exposure to U.S. equities, which it upgraded to overweight from underweight.
Lehman said the changes were due to the European Central Bank's hawkish stance on rates and the implications of that on stocks for the region, and the contrast in approach with the stance of the U.S. Federal Reserve.
As in Europe, shares in the U.S. posted heavy losses on Friday, after some weaker-than-expected jobs data spooked the market and contributed to a sharp spike in oil prices. See U.S. Market Snapshot.
On Monday, light sweet crude prices were off a touch from Friday's record high but were still trading over $138 a barrel. The contract was last down 30 cents at $138.23.
Crude at this level usually pressures airlines and at last check shares in British Airways (UK:BAY: news, chart, profile) were down 3.6% and shares in easyJet (UK:EZJ: news, chart, profile) fell 4.6%.
Also in the airline sector, Air France-KLM (FR:003112: news, chart, profile) shares lost 2.6%. Europe's largest airline said passenger traffic rose 6% in May, as public holidays in France boosted leisure traffic in the first half of the month and business underpinned demand in the second half.
Still, higher crude prices generally support the commodity price-sensitive sectors and shares in oil major BP (BP:BP p.l.c.
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Last: 68.89-0.52-0.75%
4:00pm 06/06/2008
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BP 68.89, -0.52, -0.7%) (UK:BP: news, chart, profile) rose 1.9%, while shares in Royal Dutch Shell (RDS.A:royal dutch shell plc spons adr a
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Last: 82.79-0.23-0.28%
4:01pm 06/06/2008
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RDS.A 82.79, -0.23, -0.3%) (UK:RDSA: news, chart, profile) rose 1.5%.
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