Banking Sector Leads European Stock Market Declines (Bloomberg) (19-02-2008)

Feb. 19 (Bloomberg) -- European stocks retreated after Credit Suisse Group announced write-down's and price-estimate cuts for lenders at Sanford C. Bernstein & Co. raised concerns of further losses and slowing profit growth by banks.

Stocks of Credit Suisse plunged 7 percent in Zurich after releasing a statement saying that due to errors discovered by internal controls, it is writing down asset-backed securities by $2.85 billion. BNP Paribas SA fell as analysts at Bernstein cut their estimate for the stock 18 percent, while Barclays Plc dropped after reporting a decline in profit.

The Dow Jones Stoxx 600 Index lost 0.7 percent to 321.41 as of 8:10 a.m. in London. The Stoxx 50 also decreased 0.7 percent, while the Euro Stoxx 50, a measure for the euro region, slipped 0.4 percent.

Europe's Stoxx 600 has lost 12 percent this year on concern turmoil in the financial markets will push the U.S. into recession and drag down corporate earnings.

The banking sector has been declining since early trade and this is affecting the performance of the major European indices. In particular:

Credit Suisse fell 3.95 francs to 52.8, a one-month low, after saying it wrote down the value of some asset-backed securities in the first quarter. Net income in the first quarter to date will be reduced by about $1 billion, the Zurich-based bank said in an e-mailed statement today.

BNP, France's biggest bank, slipped 1.5 percent to 59.55 Euros after Bernstein cut its price estimate to 69 Euros, citing a reduction in earnings forecast for lenders taking account of a possible recession in the U.S.

Credit Agricole SA, the country's second-largest bank, dropped 2.9 percent to 17.37 Euros. The analysts lowered their price estimate on the stock 15 percent to 23 Euros.

Bernstein cut its price its forecast on UniCredit SpA, Italy's largest bank, 9 percent to 6.1 Euros. The stock slid 1 percent to 4.88 Euros.

Barclays sank 2.8 percent to 447 pence. Net income fell 3.4 percent to 4.41 billion pounds ($8.6 billion) last year on asset write-down's and a slump in revenue from fixed-income trading. That met the 4.4 billion-pound median estimate of 13 analysts surveyed by Bloomberg.

Source: Bloomberg