The car industry was one of the biggest losers on Thursday, as worse-than-expected US unemployment data sapped market confidence.
German carmakers fell sharply after reporting that sales were continuing to plummet in the important US market.
Porsche said sales fell 62 per cent year on year in June, and the sports car maker’s shares fell 3.9 per cent to €45.86. Volkswagen fell 7.8 per cent to €228.85, Daimler was 5.5 per cent lighter at €24.98 and BMW was 3.4 per cent weaker at €26.59.
At the same time, data from across Europe showed car sales were higher in the domestic market, with government incentive schemes boosting demand. But Credit Suisse was downbeat, highlighting difficulties on the horizon when government support for the industry is reined in.
Credit Suisse analysts cut European carmakers from “overweight” to “market weight”. “We see increasing risk to cash flows as retail volume and price support from scrappage schemes fade,” they said.
In France, Renault fell 4.8 per cent to €25.56 and Peugeot was 5.4 per cent lower at €18.05. Michelin, the world’s largest tyre producer, dropped 5.1 per cent to €39.28.
But in Italy Fiat outperformed the sector, slipping just 1.1 per cent to €7.22, as data showed it increased its share of the domestic market in June.
The FTSE Eurofirst 300 lost 2.6 per cent to 843.0, falling sharply on news that the US economy lost 467,000 jobs in June, far more than had been expected.
Earlier in the day, data showed the eurozone unemployment rate rose to 9.5 per cent in May, the highest in 10 years.
Germany’s Xetra Dax was 3.8 per cent lower at 4,718.5 and France’s CAC 40 was down 3.1 per cent at 3,116.4, with cyclical stocks the hardest hit.
Irish drugmaker Elan was one of the few bright spots. Its Dublin-listed shares rose 24.6 per cent to €5.97 after it announced that Johnson & Johnson would buy a $1bn stake. In return, the US company will receive most of the rights to the Alzheimer’s drugs that Elan is developing and an 18.4 per cent stake. Elan said it would use the money to pay down some of its debt.
Swedbank was the only large lender to post a gain, up 1.1 per cent to SKr47.00, after the Riksbank announced SKr100bn of loans to stimulate bank lending. Sweden’s central bank also cut interest rates to a record low of 0.25 per cent and said it was unlikely to change them until late 2010.
Elsewhere, banks fell steeply. Commerzbank pared some of the previous day’s gains, down 6.5 per cent to €4.92. Société Générale fell 3.5 per cent to €37.90 and Banco Santander was 3.7 per cent lower at €8.38.
Crédit Agricole outperformed, losing 1.4 per cent to €9.27 following an upgrade from Credit Suisse. Analyst Guillaume Tiberghien said the French bank looked underpriced, but sounded a note of caution. “Management needs to demonstrate that its ambitions for expensive acquisitions have been reined in,” he said. “CA is unlikely to make any large acquisitions in the near term, but we believe it needs to demonstrate its price discipline has changed and we see little sign of this.”
German printing group Heidelberger Druckmaschinen was 2.8 per cent stronger at €4.07 on reports that it was close to agreeing a €1.4bn refinancing.
Spanish oil company Repsol rose 0.1 per cent to €16.22 after it said it had received approaches to buy its Argentine unit.
