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Weak banks, carmakers end European scrips rally

* Europe’s benchmark index is up 1.4 percent on the year

PARIS: European stocks dipped in early trade on Friday, falling for the first time in five sessions as banking shares slipped on renewed worries over the global credit crunch.

Geopolitical concerns following the assassination of Pakistani opposition leader Benazir Bhutto also dampened the mood in equity markets around the world.

Europe’s benchmark index is up 1.4 percent on the year, on track to record its worst annual performance since 2002.

HSBC was down 0.9 percent, HBOS down one percent and Credit Suisse down 0.5 percent.

Banking shares have been hit in recent months by a squeeze in the global credit market, and investors fear that financial institutions have not yet unveiled the full impact of the debacle in the U.S. subprime mortgage market on their books. Shares of European carmakers were among the biggest losers, tracking losses by US peers overnight. Daimler was down 1.2 percent, Renault down 1.1 percent and Fiat down 0.8 percent.

Tech shares were also on the downside, taking their cue from US rivals. American Technology Research said on Thursday investors should brace for weak business in the first half of 2008 at Applied Materials, the largest maker of semiconductor production tools.

Applied Materials declined 2.4 percent while Intel Corp, the world’s No 1 chip maker, dropped 2.3 percent overnight.

Alcatel-Lucent was down 2.3 percent, Infineon down 2.1 percent and STMicro down one percent. Around Europe, Germany’s DAX index shed 0.4 percent and France’s CAC 40 fell 0.6 percent. On the year, the DAX is up 21 percent and the CAC 40 up one percent.

That compares with a 7.2 percent rise by Wall Street’s Dow Jones industrial average, 4.1 percent gain by the S&P 500 Index and an 11 percent gain by the Nasdaq Composite Index. reuters

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