European shares extended losses in early afternoon trade on Thursday, with banks leading losses after grim US jobs data and after the European Central Bank kept interest rates on hold.
At 1402 GMT the pan-European FTSEurofirst 300 index was 1.4% lower at 800.39 points. The ECB held interest rates steady at 2.0%, taking a widely-expected breather in monetary easing. Meanwhile, the Bank of England cut interest rates by 50 basis points, taking rates to a record low of 1%.
“The ECB have kept interest rates unchanged today at 2% as ‘sticky’ labour markets allowed (ECB President Jean-Claude) Trichet to hold fire,” said Manoj Ladwa, a senior trader at ETX Capital in London. “But the President of the ECB is delaying the inevitable as Europe is in recession, and any decision other than a cut won’t be received well by those member countries suffering the most,” he added. US stock index futures fell between about 0.9 and 1.8%.
Among European banks, UBS shed more than 7%, Deutsche Bank dropped about 6% and HSBC shed more than 2%. Leading the losers, Swiss Re tumbled 23% after it posted a full-year net loss of around CHF 1 billion and said Warren Buffett’s Berkshire Hathaway was investing CHF 3 billion ($2.63 billion).
Consumer goods giant Unilever shed 6.7% after it scrapped all its targets due to global economic uncertainty, despite beating forecasts with a 7.3% rise in Q4 underlying sales. Energy shares were also standout losers, with BP down 1.5%, Royal Dutch Shell off 3.5% and Total down 3% as crude oil prices slipped down to $40 a barrel. (Reuters)