February 23, 2011 / 10:23 AM / 8 years ago

European shares fall further on Libya crisis

* FTSEurofirst 300 falls 0.4 pct

* Energy companies with operations in Libya fall

* Natixis up on return to profit, dividend plan

* For up-to-the-minute market news, click on [STXNEWS/EU]

By Brian Gorman

LONDON, Feb 23 (Reuters) - European shares added to this week’s losses in early trade on Wednesday, pressured again by the unrest in oil-rich Libya, which helped drive down shares in oil companies with Middle East operations.

At 0947 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.4 percent at 1,160.54 points, after falling 1.9 percent in the previous two sessions.

U.S. crude oil futures climbed to a 2-1/2-year peak on Wednesday on concern that unrest in Libya could spread to other top oil producers in the region and cut more output.

Oil companies with operations in the Middle East fell, including ENI (ENI.MI), Repsol (REP.MC), BP (BP.L) and Royal Dutch Shell (RDSa.L), down between 0.8 and 1.4 percent.

OMV (OMVV.VI) fell 6.4 percent after the Austrian oil and gas group warned it expected a temporary fall in Libyan production and could not exclude a complete shutdown due to unrest there, and it reported lower fourth-quarter net profit. [ID:nLDE71M06Q]

“There is very little reason for people to be adding to risk at the moment. The Middle East is going to cast a pall over the markets until they can see any proper direction,” said Justin Urquhart Stewart, director at Seven Investment Management.

He added: “There is increasing concern about what this will do to inflation.”

Miners fell as the price of copper and other metals slipped further from recent highs.

Antofagasta (ANTO.L), Kazakhmys (KAZ.L), Lonmin (LMI.L) and Rio Tinto (RIO.L) fell between 1.2 and 1.7 percent.

NATIXIS RISES

French bank Natixis (CNAT.PA) rose 5.6 percent after a return to net profit for 2010 and its plans to resume paying a dividend, marking another step in the bank’s recovery since its near-collapse during the financial crisis. [ID:nLDE71M03N]

Cable & Wireless Communications CWC.L surged 9.8 percent after saying it would sell its operating business in Bermuda to Canada’s Bragg Group for $70 million, and announced a share buyback. [ID:nLDE71M0DD]

The VDAX-NEW volatility index .V1XI, one of Europe’s main barometers of investor anxiety, rose 2.2 percent, having surged 16 percent in two days, signalling a strong rise in investor risk aversion.

The European benchmark .FTEU3 is still up more than 79 percent from its lifetime low of March, 2009, helped by monetary stimulus, but has barely recovered half the ground lost in its fall from a peak in 2007 to the 2009 low.

Across Europe, Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC40 .FCHI fell between 0.2 and 0.7 percent.

The FTSE’s fall on Tuesday through its medium-term uptrend was a cause for concern. “It suggests that the bears will have been emboldened and will almost certainly have another go at taking the FTSE back through 5900,” said Bill McNamara, technical analyst at Charles Stanley.

Bank of England chief economist Spencer Dale joined Andrew Sentance and Martin Weale in voting for higher rates in February, minutes to the Bank of England’s Feb. 9-10 meeting showed on Wednesday.

The minutes also suggested that some of those opposed a rate hike this month would consider if it if the economy shows signs of picking up after an unexpected fall in output at the end of 2010. [ID:nBELNDE74W]

Later, investors’ attention will turn to U.S. economic data, such as home sales, for indications of the strength of the recovery in the world’s biggest economy.

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