European shares drop as Syria intervention looms

Europe's main stock markets fell on Friday as investors braced for developments on Syria and digested a volley of mixed data before a long weekend in the United States.

A man walks past the London Stock Exchange, in central London, on September 22, 2011. Europe's main stock markets fell on Friday as investors braced for developments on Syria and digested a volley of mixed data before a long weekend in the United States.

At close, London's FTSE 100 slid 1.08 percent to 6.412.93 points, Frankfurt's DAX 30 fell 1.12 percent to 8,103.15 points, while the CAC 40 in Paris dropped 1.32 percent to 3,933.78 points. Milan lost 1.32 percent.

"No one is going to start buying shares before a weekend filled with so much uncertainty on Syria," said Frederic Rozier of Meeschaert Private Bank.

"Everyone's eyes are fixed on the Middle East," he said.

On the economic front, eurozone unemployment came in unchanged at a record of 12.1 percent in July but another slight fall in the total jobless offered some hope.

Analysts had been hoping the report would begin to reflect a gradual recovery which saw the eurozone post 0.3-percent growth in the second quarter to finally snap a deep 18-month recession which has destroyed millions of jobs.

Martin van Vliet at Global Economics ING said the reports confirm "that the region is in a tentative recovery" but the wider picture remains uncertain.

In foreign exchange activity, the European single currency fell to $1.3198 from $1.3241 late on Thursday. The dollar slipped to 98.19 yen from 98.32 yen.

Sterling firmed to 85.31 pence for a euro, but slipped against the dollar to $1.5470.

Meanwhile traders tracked news on Syria, with US President Barack Obama meeting top aides on Friday over possible missile strikes to punish Syria for its alleged use of chemical weapons last week.

France gave its backing to US plans after British lawmakers voted against any involvement in military action against Damascus.

The mining and energy sector took a hit, as gold and oil prices shed recent gains.

World oil prices pulled back from recent peaks as fears eased of a military strike against Syria over its alleged use of chemical weapons.

And gold prices slid to $1,394.75 per ounce, having soared on Wednesday to $1,433.83 -- the highest level since May 14 -- as investors flocked to the safe-haven metal amid heightened worries over Syria.

In reaction to lower oil prices, shares in French oil group Total dropped 1.40 percent to 41.92 euros in Paris. In London, British energy giant BP slid 1.42 percent to 446.20 pence.

Gold producers also took a modest hit from falling prices for the precious metal.

"With news that the UK will not attack Syria, commodity prices fell sharply and recent strong gold and silver shares traded sharply lower," added Ronnie Chopra, head of strategy at brokerage Tradenext.

On the upside in Paris, shares in L'Oreal surged by 3.15 percent on news that the group, the world's top cosmetics company, may be looking to buy back Swiss food giant Nestle's holding.

The stock surged to 126.25 euros on the Paris stock exchange.

In Asian stock market trading on Friday, shares mostly rose after upbeat US economic growth data and easing Syria tensions.

Hong Kong closed up 0.12 percent, Sydney added 0.84 percent and Seoul was 0.99 percent higher, while Tokyo fell 0.53 percent and Shanghai ended flat.

In the US, Wall Street fell slightly at midday with the Dow Jones Industrial Average off 0.36 percent and tech heavy Nasdaq each down 0.69 percent as traders looked forward to a long Labour Day weekend.

About the author

Writer: AFP
Position: News agency