Banks and oil lead the markets lower

EUROPEAN shares closed lower yesterday with banking and oil stocks leading the fallers, as investors booked profits ahead of the US third-quarter corporate results season.<br /><br />The pan-European FTSEurofirst 300 index of top shares was down 0.4 per cent at 988.76 points. The benchmark index is up 19 per cent this year and has surged 53 per cent since hitting a record low in early March.<br /><br />&ldquo;We are just seeing a little bit of profit taking. There is no bad economic data out there,&rdquo; said David Buik, partner at BGC Partners.<br /><br />&ldquo;We have Alcoa&rsquo;s results tonight and then the earnings show will be on the road. Overall earnings are expected to be good in comparison to this time last year but everyone will be looking to see how companies guide for the fourth quarter,&rdquo; Buik said.<br /><strong><br />Alcoa</strong> is due to kick off the results season in the United States after the market closes.<br /><br />In Europe bank shares featured among the biggest losers yesterday. <strong>Banco Santander </strong>fell 1 per cent following a 14.1bn reais ($8.05bn) share flotation for its Brazil unit, while <strong>BNP Paribas, Societe Generale</strong> and <strong>UBS</strong> were down 1.2 to 5.9 per cent.<br /><br />Oil stocks were under pressure as crude prices fell 1.8 per cent. <strong>BG Group, BP, Royal Dutch Shell </strong>and <strong>Total </strong>were down 0.7 to 1.7 per cent.<br /><br /><strong>J Sainsbury</strong>, Britain&rsquo;s third-biggest grocer, was down 3.3 per cent after posting slower quarterly sales growth and saying growth in the industry would moderate further as food price inflation eases.<br /><br />&ldquo;We think there may be a debate as to whether Sainsbury could be beginning to lose market share both to an improving Tesco and to the fresh food specialists such as <strong>Morrison </strong>and <strong>Waitrose</strong>,&rdquo; Credit Suisse analysts said.<br /><br /><strong>Metro </strong>slipped 3.2 per cent after a 5.2 per cent stake in German retailer owned by major investor <strong>Otto Beisheim Group</strong> was placed at 35 euros per share, a source close to the transaction said.<br /><br />Spanish builder <strong>FCC</strong> lost 5.1 percent after announcing plans to issue 450m euros in convertible bonds.<br /><br />On the upside, <strong>LVMH</strong> gained 1.6 percent after French fashion and leather goods company <strong>Louis Vuitton</strong>, which is part of the luxury group, said its sales remained on a rising trend and it looked forward to the end-of-year festive season.<br /><br />In macro-economic news, the euro zone&rsquo;s economy shrank more than previously thought in the second quarter of 2009 because contributions from household demand and trade turned out to be smaller than initially estimated.