EUROPEAN stocks fell last week, ending a three-week gain, as earnings from financial companies missed analysts' estimates and record crude oil weighed on airline shares.
UBS AG posted its first weekly drop since March after Europe's largest bank announced plans to cut jobs and said clients withdrew a net US$12.2 billion from its asset and wealth-management divisions. UniCredit SpA tumbled after reporting first-quarter profit that missed analysts' predictions. Swiss Reinsurance Co, the world's largest reinsurer, said profit fell 53 percent. British Airways Plc led carriers lower as oil rose above US$126 a barrel in New York.
The Dow Jones Stoxx 600 Index sank 1.3 percent to 324.85. The measure is down 11 percent this year as losses at the world's largest banks have totaled US$321 billion.
"The outlook for revenues in the medium term is going to be mediocre" for investment banks, Bob Parker, vice chairman of Credit Suisse Asset Management, which has more than US$600 billion, said in a Bloomberg Television interview in London. "One factor which is weighing on the equity markets is the high oil price."
Profits for companies in the Stoxx 600 will probably rise 0.13 percent this year, compared with an 11-percent growth forecast at the beginning of the year, according to weekly data compiled by Bloomberg News.
National indexes fell in 13 of the 18 western European markets. France's CAC 40 dropped 2.2 percent, and Germany's DAX lost 0.6 percent. The UK's FTSE 100 slipped 0.2 percent. The Stoxx 50 Index slumped 2 percent, as did the Euro Stoxx 50, a measure for the countries sharing the euro.
UBS tumbles
European Central Bank policy makers left their benchmark interest rate at a six-year high last week, and the Bank of England kept borrowing costs unchanged at 5 percent after three cuts since December.
UBS slumped 12 percent. The bank, battered by US$17.3 billion of first-quarter losses at its investment-banking unit, said it will cut its workforce by 7 percent.
The bank also plans to exit the municipal bond business and sell US$15 billion in distressed assets to a newly created fund managed by BlackRock Inc. UBS had a net loss of 11.5 billion francs (US$10.9 billion) in the first quarter.
Bank stocks were the biggest decliners among 18 industry groups on the Stoxx 600, losing 3.9 percent.