European shares reverse gains

Fri Jul 4, 8:07 AM

LONDON (AFP) - European equities fell on Friday as investors pocketed gains won a day earlier, mulled more bad news for the banking sector and began looking to next week in the absence of Wall Street trading, dealers said.

London's FTSE 100 index of top shares dropped by 0.78 percent in value to 5,433.70 points in early afternoon deals.

Frankfurt's DAX 30 index shed 0.70 percent to 6,309.25 points and the Paris CAC 40 index lost 1.08 percent to 4,297.24.

The Euro Stoxx 50 index of top eurozone shares declined by 1.10 percent to 3,294.20 points.

The euro stood at 1.5690 dollars.

European stock exchanges had advanced Thursday on prospects for stable interest rates in the eurozone and in response to a US job creation report that was not as bad as had been feared, dealers said.

Wall Street, which is shut Friday owing to US Independence Day, had closed mixed overnight. With trading thin ahead of the holiday, the market reacted to news that US employers shed 62,000 nonfarm jobs and the unemployment rate held steady last month at 5.5 percent, roughly in line with forecasts.

Japanese share prices slipped for a 12th straight trading day on Friday, continuing their longest losing streak in more than five decades on worries about the earnings outlook, dealers said.

Crude oil prices had Thursday rocketed above 146 dollars a barrel for the first time, heightening inflation concerns. They fell Friday on profit-taking.

The banking sector meanwhile provided a focus for investors in London after

Bradford & Bingley said on Friday that US investment group TPG Capital had pulled out of an agreement to buy about one quarter of the struggling British bank.

B&B's share priced dived by 9.07 percent to 55.47 pence in reaction.

Other British banks under pressure included Barclays, down 3.42 percent at 282 pence, and Royal Bank of Scotland, which lost 2.70 percent to 207.25 pence.

With Wall Street not reopening until Monday, investors in London were looking ahead to next week's key decision on British interest rates.

The Bank of England makes its latest monthly rate call on Thursday, with analysts expecting the BoE to keep borrowing costs at 5.0 percent as it seeks to battle soaring inflation and sliding economic growth.

The European Central bank on Thursday raised eurozone lending rates by a quarter-point to 4.25 percent in a move aimed at fighting record inflation in the eurozone.

- Dow Jones Newswires contributed to this story -