European stocks lower as banks fall
European equities were lower on Tuesday as banks reacted to market talk of more credit market shocks, but losses were capped by strong earnings and an injection of liquidity by the European Central Bank.
By late morning in London, the FTSE Eurofirst 300 was down 0.4 per cent to 1,476.71, Frankfurt’s Xetra Dax shed 0.2 per cent to 7,392.06, the CAC 40 in Paris fell 0.2 per cent to 5,389.24 and London’s FTSE 100 was flat at 6,078.9.
The ECB joined the Bank of Japan and the Reserve Bank of Australia in pumping further cash into the financial system to avert a breakdown in lending.But with warnings of further subprime mortgage and credit market pain to come, the banking sector reversed its rally of the previous two sessions. WestLB, the German state-backed bank, said subprime concerns were making it difficult for German banks to get credit lines from foreign partners following the near bankruptcy of IKB earlier in the month.