European stocks sag as investors take a breather

Stock traders go about their business on the floor of the Frankfurt stock exchange underneath the DAX daily graph on Thursday. PHOTO: AFP

European shares drifted lower on Friday as investors took a break after a volatile week, with a continued decline in the insurance and banking sectors balanced by further bid talk around consumer goods giant Unilever.

Broadly the German DAX 30 index closed down 0.07 percent at 6,580.78, the French CAC 40 index lost 0.1 percent to 5,382.16 and the UK FTSE 100 index slid 0.04 percent to 6,130.60.

European markets didn't get much direction from the previous Wall Street session and markets had therefore been awaiting US data on consumer prices and consumer confidence, said Claire Collingwood, a trader at CMC Markets.

US stocks turned lower as investors weighed an upbeat report on industrial production against news of rising consumer prices in February and falling consumer confidence in March. Consumer prices rose 0.4 percent, a tenth of a percentage point above expectations, though the core index, which excludes food and energy, was in line with expectations.

Among decliners in the insurance sector, Old Mutual lost 0.8 percent in London and Allianz gave up 0.7 percent in Frankfurt. The broad decline in the banking sector also continued as HBOS, HSBC and Credit Agricole all fell at least 0.7 percent.

Oil companies also fell, with BP down 1 percent and Royal Dutch Shell shares falling 1.1 percent.

Unilever PLC climbed 2.8 percent in London to an eight-year high, adding to the previous session's gains, after an investor presentation earlier in the week got a favorable response. Traders have also flocked into the Anglo-Dutch giant as it is increasingly seen as a possible private-equity takeover target.

Imperial Tobacco also continued to gain ground, adding 4.9 percent after its announcement Thursday that it has made a preliminary takeover approach to Franco-Spanish rival Altadis.

French electronics group Thomson added 4 percent after it was upgraded to buy from neutral at Merrill Lynch, which said the group's core business is finally coming to the fore.