European shares fall led by banks, airlines, cars

By Peter Starck

FRANKFURT, March 13 (Reuters) - European shares fell on Thursday as financial sector woes weighed on banks such as UniCredit (CRDI.MI: Quote, Profile, Research) while the high oil price took its toll on airlines and euro strength hurt exporters, notably carmakers.

Leading indexes trimmed steep intraday losses, however, after credit rating agency Standard & Poor's said in a report released late in the European trading day that an end to writedowns was now in sight for big financial institutions.

Some strategists nevertheless warned that the negative impulses that have hammered stock markets for months could continue to haunt investors.

"The adverse effects from the troubles in the credit market are growing worse, the U.S. economy is in recession, Europe is slowing down but Asia is still holding up," said Wolfgang Hoetzendorfer, chief investment officer at State Street Global Advisors in Germany.

"There will be an impact on equity markets through slower corporate earnings growth," he said.

"The financial crisis is dragging on longer than anticipated, commodity prices and the euro remain high and there are persistent worries of a recession in the U.S.," DZ Bank analyst Christian Kahler wrote in an equity strategy note.

DZ Bank cut its forecasts for the DJ EuroStoxx 50 index to 4,000 points on a six-month horizon and 4,100 points in 12 months from 4,450 and 4,600 points earlier.

That index of European blue-chip shares fell 1.3 percent on Thursday to 3,599.58 points. The broader FTSEurofirst 300 index closed 1.3 percent lower at 1,268.46 points, taking its losses for the year to 15.8 percent.