Europe: Shares weighed by BT, utilities; Italy stocks slide

[MILAN] European shares pulled lower on Thursday, weighed down by losses in BT following a disappointing update and weakness among utilities stocks, while political jitters hit Italian stocks.

The banking sector was a bright spot, however, with gains in RBS following a multi-billion dollar deal to settle a US investigation of the bank's bond sales, and a solid update from Italy's biggest bank UniCredit helping limit losses on the pan-European Stoxx 600, which ended just 0.1 per cent lower.

BT shares fell more than 7 per cent after saying it was cutting 13,000 jobs, the latest attempt by Britain's biggest telecoms group to rebuild after an accounting scandal and a downturn in trading.

Traders said its latest update showed a disappointing guidance, while Jefferies analysts highlighted that the company missed out on the opportunity of announcing a bolder move of fiber roll out, while job cuts were bigger then expected.

"No evidence of inflection in results or mindset," said Mr Jefferies.

RBS rallied 3.8 per cent after it agreed to pay a smaller-than-expected US$4.9 billion to resolve a US investigation into its sale of mortgage-backed securities.

Analysts, who had estimated the US could impose a fine of up to US$12 billion, said the bank could reinstate a dividend.

Gains in RBS helped the UK's FTSE rise 0.5 per cent, outperforming other European bourses after the Bank of England's decision to keep rates on hold sparked a drop in sterling.

Still in banks, UniCredit rose 1.8 per cent after it posted its best first-quarter result since 2007, topping forecasts with a 1.1 billion euro net profit thanks to lower-than-expected loan losses.

Italy's FTSE MIB fell 1 per cent as bond yields jumped on an increased possibility that a government of anti-establishment parties will take power.

Some of the biggest movers on the Stoxx also included precious metals miner Randgold, down 7 per cent after its quarterly profit fell, while Next rose more than 6 percent after a strong outlook and trading update.

Utilities were a weak spot, down 0.9 per cent to lead sectoral losers in Europe, weighed by a disappointing update at Italy's Enel.

Oil stocks took a breather after hitting their highest level in more than 3-1/2 years in the previous session after the price of oil jumped on the back of the US quitting a nuclear deal with Iran.

The sector ended the day 0.9 per cent lower.

REUTERS