European stocks drop as financials tumble; DAX down 0.51%

Investing.com – European stock markets were broadly lower on Thursday, as shares in the financial sector performed poorly following downbeat earnings results from Credit Suisse, while U.S. futures indexes pointed to a lower open on Wall Street.

During European morning trade, the EURO STOXX 50 slumped 1.11%, France’s CAC 40 dropped 0.98%, while Germany's DAX was down 0.51%.

Shares in the financial sector were broadly lower after Swiss banking giant Credit Suisse reported lower-than-expected fourth quarter net earnings.

The lender said net profit in the quarter totaled CHF841 million, falling short of market expectations for profit of CHF914 million. The bank cut its full-year earnings outlook and lowered its payout to shareholders.   

Following the results, the lender saw shares drop 3.53%. Meanwhile, Spain’s largest lender Banco Santander saw shares plunge 3.89%, shares in Europe’s largest banking group BNP Pairbas sank 2.17%, while Deutsche Bank saw shares slide 2.03%.  

Shares in French automaker Renault dropped 5.21% after it reported fourth quarter earnings that were broadly in line with expectations. The automaker said that fourth quarter sales in Europe fell by 2%, while sales in France declined by 8% from a year earlier.

However, shares in France’s largest telecom equipment group Alcatel-Lucent rallied 11.65% after it said fourth quarter net profit soared by 86% to EUR340 million. The company lifted its 2011 earnings outlook, citing rising global demand for broadband networks.    
 
Shares in Deutsche Boerse, the operator of the Frankfurt exchange climbed 2.42%, boosted by news it was in talks to acquire New York stock market operator NYSE Euronext in what would create the world’s largest stock exchange. Paris-listed shares of NYSE surged 5.93% following the news.

In London, the commodity-heavy FTSE 100 was down 0.74% as miners led losses after metal prices retreated.

Shares in the world’s fourth largest copper producer Xstrata tumbled 2.11%, mining giant Rio Tinto saw shares drop 1.66%, while rival BHP Billiton saw shares slip 0.96%.

Meanwhile, shares in Royal Bank of Scotland sank 1.92%, while rival Barclays saw shares slip 1.62%.

The outlook for U.S. equity markets, meanwhile, was downbeat ahead of earnings reports from packaged food manufacturer Kraft Foods and from wireless service provider Sprint Nextel. 

The Dow Jones Industrial Average futures pointed to a loss of 0.43%, S&P 500 futures indicated a drop of 0.58%, while the Nasdaq 100 futures pointed to a decline of 0.94%.

Later in the day, the U.S. was to release its key weekly report on initial jobless claims, as well as data on wholesale inventories and on its federal budget balance.