By Anshuman Daga
LONDON- European shares fell as much as 2 percent on Thursday to end at their lowest in two weeks as oil hit a record high above $76 a barrel amid escalating violence in the Middle East and stoked worries about corporate earning
SAP fell 6 percent after the software company pre-announced second-quarter results and missed analysts’ estimates for licence sales, operating earnings and total sales. Business Objects and Atos both lost 2 percent.
The pan-European FTSEurofirst 300 index closed 1.4 percent weaker at 1,293.6, its lowest close since June 28 and down 8 percent from a near five-year high struck in May.
The index suffered its biggest one-day loss in a month.
“Macro events are still a big focus but earnings news flow is bound to dominate sentiment from next week and early indications are bad,” said one trader at a French brokerage.
Both the Dow Jones industrial average and the Nasdaq lost 0.7 percent. Germany’s 30-share DAX index shed 2 percent, France’s CAC 40 fell 1.8 percent and Britain’s FTSE 100 declined 1.6 percent.
“As long as the oil price is increasing, it will harm profits. In our opinion, we will see a good second quarter with good profits, but the outlook is the big question mark,” said Philipp Musil, fund manager at Constantia Privatbank.
The Bank of Japan’s interest rate decision takes centre stage on Friday with the central bank widely expected to hike rates for the first time in six years.
OIL HITS MARKETS
U.S. crude oil prices hit a record high on renewed worries over supply from major exporter Nigeria and as conflict between Israel and Lebanon heightened international tensions.
Oil shares still ended mixed, with BP up 0.2 percent and Total down 1 percent.
The prospect of higher fuel costs hit shares in airlines and travel companies, with cruise operator Carnival down 3.6 percent, while among airlines, Air France fell 3.7 percent and British Airways dropped 2 percent.
UK’s biggest insurer Aviva fell 3.2 percent as it agreed to pay $2.9 billion in cash for U.S. life insurer AmerUs and said it would pay for the deal in part with a share issue, raising about 900 million pounds.
Among standout losers, UK media group Emap tumbled 9 percent, with sources saying the company and Warner Music are likely to suspend their merger talks in the wake of a European court ruling related to the Sony BMG merger.
Bucking the trend, Premiere surged 20 percent after the German pay-TV broadcaster struck a deal to show top German league soccer on cable TV.
Carrefour rose 1.6 percent after the French retailer’s second-quarter sales came at the top end of consensus market forecasts. — Reuter