European stock markets falling led by banks (MarketWatch) (28-01-2008)

LONDON (MarketWatch) - European shares were declining in early trade on Monday, as concerns regarding economic growth as well as financial sector transparency after Societe Générale's fraud loss continued to put pressure on equity markets.

The pan-European Dow Jones Stoxx 600 index declined 1.5% to 317.53, with banks again losing ground investors continued to mull Societe Générale’s $7.1 billion euro trading loss.

Societe Générale shares lost 5% as Christine Lagarde, the French finance minister, reportedly told the France 2 television station Monday that there's no need for Societe Générale to merge with another.

Other banks were also in the red, including Deutsche Bank, down 1.4% and Barclays, down 1.9%.

Within one hour of opening, the French CAC-40 index was down 2.2% to 4,770.77, the German DAX 30 index was losing 1.7% to 6,702.61 and the U.K. FTSE 100 index was losing 1.4% to 5,789.30.

There was, however, some good news in the financial sector. Shares in Dutch-Belgian banking group Fortis jumped 5.7% in Brussels after the group said that its capital position remained sound, it will leave its dividend policy unchanged and that it expects fiscal 2007 net profit of 5 billion Euros.

It added, however, that applying the tougher valuation models for mortgage exposure used by some of its peers would lead to a profit of around 4 billion Euros.

The bank made the statement after its shares slumped on Friday amid rumors that it may issue a profit warning or move to strengthen its capital due to tough credit market conditions.

Turning to deal news and shares in Norwegian software maker Trolltech shot up 56% to 15.60 krona after mobile phone giant Nokia said that that it would buy the firm for 16 krona a share in cash, equivalent to roughly 844 million krona ($153.7 million) in total.

Nokia shares fell 2%.

Source: MarketWatch