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Europe shares fall for 4th straight week

Published 07/10/2009, 12:41 PM
Updated 07/10/2009, 01:16 PM
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* FTSEurofirst 300 falls 1.1 percent; fourth week of losses

* Drugmakers suffer on bleak outlook

* Financials slip; uncertain corporate earnings weigh

* Energy shares track weaker oil prices

By Brian Gorman

LONDON, July 10 (Reuters) - European shared closed lower on Friday, notching up a fourth straight week of losses on worries about corporate earnings and the pace of economic recovery, with drugmakers and banks suffering most.

The FTSEurofirst 300 index of top European shares fell 1.1 percent to 814.29 points, its lowest close since April 28. Over the week, it fell 3.4 percent, but is still up more than 26 percent from the record low it hit on March 9.

Drugmakers were among the biggest losers. GlaxoSmithKline, Novartis, Shire, AstraZeneca, Roche and Sanofi-Aventis fell between 1.1 and 2.4 percent.

Next week, Novartis will be the first of the sector's major players to report second-quarter earnings.

Pharmas initially fared better in the downturn than other sectors but have begun to underperform, and bleak prospects of more competition, problems getting new drugs to market and cheaper medicines are looming on investors' radars.

U.S. consumer sentiment soured in early July, slipping to its weakest since March, when confidence in the financial sector and economy were at a low ebb, the Reuters/University of Michigan Surveys of Consumers showed on Friday.

Consumers' escalating concerns about an extended economic downturn, job security and erosion of wealth were the main factors depressing sentiment, the survey said.

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Its preliminary index of confidence for July fell to a reading of 64.6 from the final reading for June of 70.8.

"The Michigan number was a bit of a disappointment," said Mike Lenhoff, chief strategist at Brewin Dolphin Securities, in London.

"But second-quarter earnings have become more important than ever, as the market is focused on recovery. Expectations have been revised down so much, that earnings may end up surprising some people on the upside."

OILS FALL

Energy stocks slipped, as crude prices fell more than 2 percent to $59.10 a barrel. BP, Royal Dutch Shell, BG Group, StatoilHydro and Total shed 0.6-1.7 percent.

Sentiment also weakened following a downbeat earnings outlook from U.S. oil major Chevron after Wall Street closed on Thursday, warning of weaker refining margins.

Telecoms to fall included Vodafone and Telefonica, down 1.5 and 1.2 percent, respectively.

Among banks, UBS fell 2.4 percent ahead of a high-stakes trial in the United States next week that could force it to reveal secret client data.

Norway's DnB NOR ASA fell 3.6 percent after posting a bigger-than-forecast drop in second-quarter profit after losses and write-downs at its Baltic operations.

Banco Santander, BNP Paribas, HSBC and UniCredit fell between 1 and 3.7 percent.

UK insurer Aviva fell yet again, down 4.9 percent, extending its decline for the week to more than 18 percent on worries about cutting its dividend. Allianz fell 1.8 percent.

Retailing was one of the few sectors to gain. Tesco, Morrison and Marks & Spencer rose between 1.7 and 2.5 percent.

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Around Europe, UK's FTSE 100 index, Germany's DAX and France's CAC 40 closed between 0.8 and 1.4 percent lower.

Wall Street was lower as European bourses were closing. The Dow Jones, S&P 500 and Nasdaq Composite were down between 0.4 and 0.9 percent. (Additional reporting by Atul Prakash; editing by Simon Jessop)

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