Europe: Shares end strong week on sour note

[MILAN] European shares turned lower on Friday, hit by a drop in bank, oil and auto shares, as investors locked in gains following a strong week that has helped to stabilise markets after a tumultuous start to the year.

The pan-European FTSEurofirst 300 was down 0.7 per cent at 1,285.07 points at the close, but still gained 4.3 per cent since Monday, posting its best week since October 2015.

The index had been buoyed by gains in bank and energy stocks this week after a tough start to the year, but those sectors saw profit-taking on Friday.

"We were due a recovery, as the markets were oversold... but the underlying story hasn't really changed, and people don't want to take risks heading into the weekend," said Mike McCudden, head of retail derivatives at Interactive Investor. "There is still a stand-off between oil-producing parties, and the concerns over the banks have not gone away."

Among top sectoral fallers were the banks, which fell 1.4 per cent. They are still up 8.5 per cent from last week's lows but are down over 20 per cent for the year on concern over how they can protect profits in a low-interest-rate, low-growth environment.

Oil prices also resumed their slide as a record build-up in US crude stockpiles stoked worries about global oversupply. Oil and gas shares fell 1 per cent.

"At this stage ... it is still unclear if the current up-move has run its course or if this is merely a 'normal' and much-needed consolidation before the next leg higher," said Markus Huber, a trader at City of London Markets.

Auto shares fell 1.2 per cent, with scandal-hit Volkswagen under pressure again. The stock fell 3.2 per cent after a media report that VW does not expect to reach an agreement with the United States over its rigging of emissions tests before the end of March.

Allianz fell 1.3 per cent after the German insurer missed profit and dividend expectations and gave a 2016 operating profit target in line with analysts' predictions.

Baader Bank Helvea analyst Daniel Bischof reiterated his"hold" rating on the stock, noting net income missed forecasts because of a goodwill impairment on its life business in Asia.

Valeo led gains on the FTSEurofirst, up 4.5 per cent, after the French car-parts maker posted a 30 per cent rise in full-year net profit and proposed raising its dividend by 36 per cent.

Italian broadcaster Mediaset rose 3.4 per cent after local media reported that French media group Vivendi had been discussing an acquisition of its pay-TV business. Mediaset said it was not in talks with Vivendi over a sale.

REUTERS