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STOCKS NEWS EUROPE-Aviva lower on fresh dividend fears

Thu Jul 9, 2009 11:36am EDT

Stocks

   

Shares in British insurer Aviva (AV.L) fall steeply, extending a sharp decline on Wednesday, on continued concerns falling profits may force the company to cut its dividend.

Shares in the company, the UK's second-biggest insurer, close down nearly 4 percent, making them the biggest faller in the FTSE 100 share index, which ends 0.5 percent higher.

The market "is waking up to the arithmetical fact that earnings this year aren't going to be as strong as last year," says ING analyst Kevin Ryan.

The projected decline in Aviva's profits, driven by weaker investment yields and lower insurance sales, could put pressure on the company to cut the shareholder payout when it unveils its half-year results on Aug. 6, Ryan says.

Aviva's policy is to pay a dividend that is covered 1.5 to 2 times by after tax earnings.

Thursday's decline follows an initial 10 percent slump on Wednesday after a research note by analysts at Keefe, Bruyette & Woods raised the possiblity Aviva might trim its dividend.

Reuters Messaging rm://myles.neligan@reuters.com@reuters.net


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