European stocks slide, London down 1.41%

By AFP

July 15, 2010 Updated Jun 8, 2009 at 10:01 AM CDT

Europe's main stock markets slumped on Monday, with London dragged down by the banking sector as British Prime Minister Gordon Brown battled to stay in power after an election drubbing.

In late morning trade, London's FTSE 100 index of leading shares was down 1.41 percent to 4,375.22 points.

Nearing the half-way mark in Paris, the CAC 40 shed 1.62 percent to 3,284.93 points while in Frankfurt the DAX 30 dropped 1.67 percent in value to reach 4,992.22.

The DJ Euro Stoxx 50 index of leading eurozone shares fell 1.61 percent to 2,462.76 points.

On the currency market the euro slipped to 1.3835 dollars.

"It has been a somewhat wobbly start for share prices, as we have seen a continuation of the weak sentiment seen on Friday afternoon," said IG Index market strategist Anthony Grech.

"News flow is a bit thin on the ground so far and there is no single reason for today's slide, although banks are under some pressure."

Grech added: "Looking ahead to the US open, at the moment we are expecting the Dow Jones to open down around 80 points -- and with little of note on the economic calendar in the US this afternoon, traders may be resigning themselves to a choppy and directionless day ahead," he added.

In London, the share price of Lloyds Banking Group dived 6.95 percent to 61.6 pence in morning trade after the state-controlled company reported an 87-percent take-up for heavily discounted new shares.

LBG had launched the rights-issue last month aimed at raising 4.0 billion pounds (4.6 billion euros, 6.3 billion dollars) to help repay its bailout by the British government, which owns about 43 percent of LBG.

Under terms of the new stock offer, should no investors come forward for the remaining 13 percent of shares the British government will add to its stake.

Barclays bank meanwhile dropped 2.37 percent to 278.25 pence after confirming it had held talks with US money manager BlackRock on the possible sale of the British group's asset management arm.

The Sunday Telegraph newspaper had reported over the weekend that a sale of Barclays Global Investors (BGI) to BlackRock for 13 billion dollars (9.3 billion euros) could be announced this week.

Attention in Britain was also firmly focused on the future of Brown, whose Labour Party suffered an extremely poor showing in European elections.

Labour was beaten into third place behind fringe anti-Europeans the United Kingdom Independence Party (UKIP), leaving Brown fighting for his job days after 10 of his ministers resigned.

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