7:00 PM Frankfurt, Paris; 1:00 PM New York – The European benchmark indexes declined more than 3% after banks fell more than 5%. Banks fell sharply on the worries that exposure to Dubai loans may increase losses. IKB Deutsche Industriebank swings to first-half loss of €398 million. Vivendi and GE talks to sell stake in NBC Universal accelerate.

In London FTSE 100 Index closed lower 170.68 or 3.18% to 5,194.13, in Paris CAC 40 Index decreased 129.93 or 3.41% to close at 3,679.23, in Frankfurt DAX index lower 188.85 or 3.25% to close at 5,614.17. In Zurich trading SMI decreased 138.82 or 2.16% to close at 6,283.38.

European Banks Fall on Dubai Loan Losses

Banks led the decliners after Dubai proposed a debt roll over as it faces a liquidity crunch. The news unnerved investors and HSBC, Credit Suisse, Deutsche Bank, Commez Bank, Lloyds Banking Group and Barclays fell on the worries that banks may have to take additional losses.

Deutsche Bank dropped 6.4% to €46.66 and Commerzbank declined 3.9% to €6.10. BNP Paribas dropped 5.1% to €53.85 and Societe Generale declined 5.5% to €45.62.

Dubai World the parent of Nakheel Limited has $59 billion of liabilities and $10 billion of its debt maturing before the end of the first quarter of 2010. Nearly 70 banks have exposures to the securities issued by Dubai World.

Dubai World recently completed $1.93 billion of Islamic bond offering and sought emergency assistance from the central bank in Abu Dhabi of $5 billion and may need additional $5 billion in the next three months.

Gainers & Losers

Adidas AG added 0.5% to €37.89 after the sporting- goods maker was upgraded to “buy” from “neutral” at Goldman Sachs Group Inc.


Arcelor Mittal declined 5.7% to 24.90 after Tata Steel of India reported a second quarter loss of $580 million on the account of lower steel prices at its Corus Group Ltd based in Europe.

Bilfinger Berger AG decreased 4.5% to €49.29 after the builder was downgraded to “neutral” from “buy” at Goldman Sachs.

Bouygues SA declined 0.7% to €34.50 and the company may be an appropriate merger partner for Orascom Telecom of Egypt according to its Chairman Naguib Sawiris comments in an interview with French business daily La Tribune.

Compagnie de Saint-Gobain SA dropped 0.8% to €38.26 after the supplier of building materials was downgraded to “sell” from “neutral” at Goldman Sachs Group Inc.

Deutsche Wohnen AG closed unchanged at €14.52 after the residential property management company said nine months revenues rose 2.9% to €228.2 million from €226.7 million a year ago. Net loss in the nine months was €2.5 million or €0.09 per diluted share compared to net loss of €13.3 million or €0.50 per share a year ago.

Electricite de Strasbourg SA rose 0.4% to €44.51 after the electricity distributor said that Henri Proglio has been appointed as Chairman and Chief Executive Officer of the company.

Heidelberger Druckmaschinen AG the maker of printing presses dropped 5.6% to €5.55 and the company will split into three separate units of equipment, services and financial services.

Highlight Communications AG fell 2.1% to €4.13 after the company estimated 2009 consolidated revenues between CHF 490 million and CHF 510 million and earnings per share between €0.42 and €0.44.

IKB Deutsche Industriebank AG closed unchanged at €0.88 said first–half net interest income fell 46% to €102 million from €190 million a year ago. Net loss in the first–half was €398 million or €0.65 per diluted share compared to net profit of €240 million or €2.48 per share a year ago.

IVG Immobilien AG the commercial real estate company fell 2.1% to €6.45.

KWS SAAT AG decreased 2.6% to €117.00 an agricultural company said first quarter revenues fell 21% to €65.3 million from €82.8 million a year ago. Net loss in the quarter was €20.7 million or €3.23 per diluted share compared to net loss of €6.3 million or €1.38 per share a year ago.