Euro Shares Mixed, Ignore Fed Speech
European shares traded mixed Friday, shrugging off a U.S. rally caused by remarks by Federal Reserve Chairman Ben Bernanke that the central bank was prepared to act aggressively to rescue a weakening economy.
Asian markets were sharply lower in the afternoon session as investors sold down shares after report in the New York Times that Merrill Lynch could suffer $15 billion in losses from soured mortgage investments, almost twice its original estimate. Japan shed almost 2 percent and South Korea finished 2.3 percent lower.
Uncertainty in the financial sector continued in Europe, where Swiss bank UBS said in a letter to shareholders that it cannot predict the final impact of the U.S. residential mortgage crisis on its subprime mortgage related securities, but expects its capital position to remain strong.
UBS shares opened flat.
“There is a high level of suspicion in the European market today guaranteed approval cash advance loans. They won’t have the enthusiasm that you were seeing in America,” Justin Urquhart Stewart at 7 Investment Management told Reuters. “The level of cynicism in Europe is high because we are concerned about more losses coming through from the banks.”
In the UK, aero-engine maker Rolls-Royce said it plans to cut 2,300 jobs to help offset rising costs and the effect of the weak dollar, adding that the move would not affect 2007 results.
The takeover battle for Scottish & Newcastle continues, with the Heineken CEO telling a Dutch newspaper that he could not exclude a higher bid, after S&N rejected the 780 pence a share, or 7.6 billion pounds ($14.9 billion), offer it made together with Carlsberg.
And British buy-to-let mortgage lender Paragon announced a deeply-discounted, fully underwritten rights issue on Friday to raise 287 million pounds ($560 million).
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