The European markets fell for the first time in three days on Tuesday on concern that banks may need to raise more capital and the outbreak of swine flu will hamper efforts to revive the global economy.
The benchmarks pared some of their losses after an index of U.S. consumer confidence index increased this month by much more than economists had been expecting. The Conference Board said it consumer confidence index jumped to 39.2 in April from an upwardly revised 26.9 in March. Economists had expected the index to increase to 29.7 from the 26.0 originally reported for the previous month.
Crude for June delivery fell $0.74 to $49.40 a barrel on the New York Mercantile Exchange, by the time the European markets closed, on fears that the outbreak of swine flu would delay an economic recovery and further dampen energy demand.
The FTSEurofirst 300 index of pan-European blue chips closed 1.53% lower at 801.24 points, while the narrower DJ Stoxx 50 index fell 1.34% to 1,966.58 points.
Around Europe, the U.K.'s FTSE 100 index slipped 1.69% to 4,096.40, while France's CAC 40 index fell 1.6% to 3,051.02 and Germany's DAX index dropped 1.85% to 4,607.42.
Banking stocks slipped after the Wall Street Journal reported that Bank of America and Citigroup may require more cash following the completion of government stress tests. BNP Paribas, France's largest bank, dropped 3.9%, while Deutsche Bank, Germany's biggest lender, slid 6.9% and Credit Suisse, Switzerland's second largest bank, fell 3.2%.
HSBC, Europe's largest bank, declined 2%, while Royal Bank of Scotland, Britain's second largest bank, slipped 4.7% and Lloyds Banking Group, Britain's biggest mortgage lender, dropped 4.9% after the Financial Times reported that Britain's largest banks may be required to hold more capital than the industry average to help guard against future financial crises under a plan that Chancellor of the Exchequer Alistair Darling is expected to announce next month.
Mining stocks edged lower after copper led industrial metals lower in London. BHP Billiton, the world's biggest miner, fell 2.2%, while Anglo American, the second biggest, dropped 5.6% and Rio Tinto, the third biggest, slipped 6.3%. Copper miner Antofagasta lost 3.3%.
Airline stocks continued to fall on swine flu fears. Air France-KLM, Europe's biggest airline, declined 1.9% and British Airways, the third biggest, slipped 5.4%.
Daimler, the world's second largest maker of luxury cars, dropped 3.7% after the company reported its first back-to-back losses in at least 10 years. French automakers Renault and Peugeot fell 5.2% each.
ArcelorMittal, the world's biggest steelmaker, lost 6.1% after U.S. Steel reported a first quarter net loss that was more than twice analysts' estimates and cut its dividend as prices plunged.
Air Liquide, the world's biggest maker of industrial gases, slid 5.6% after the company cut its full year outlook first quarter revenue declined.
Sandvik, the world's largest maker of metal-cutting tools, tumbled 15% after the company reported an unexpected first quarter loss and said orders dropped 39%.
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