AIG Earnings Report, $124 Oil Barrel Pull Down European Stocks

(AHN) - Stocks in European markets continue to suffer on Friday due to negative sentiments arising from the financial, commodities as well as pharmaceutical sectors.

Earnings from the companies including financial firms have affected the sentiments of the investors as some analysts said that the earnings expectations are still too high.

The pan-European Dow Jones Stoxx 600 index during the intraday trading was down by as much as 1.79 percent to 329.28 at 12:03 in London, extending the year-to-date loses by 11.32 percent.

In late morning trade session in London at 10:54 a.m., the FTSE 100 was moving down by 89.70 points or 1.43 percent at 6,181.10 points. Frankfurt's Dax was decreasing by 95.80 points or 1.35 percent at 6,976.10 points.

At the same time, the CAC 40 in Paris was dropping by 120.91 points or 2.39 percent at 4,934.67 points.

In financial sector, American International Group Inc. (AIG), the world's largest insurer by assets, led the drop in the financial sector in European markets on Friday.

New York-based AIG stocks plunged in Germany by as much as 6.8 percent to $41.13 after it reported that the firm requires to raise additional $12.5 billion.

The insurer reported its first quarter net loss late on Thursday of $7.81 billion, while exposing $15 billion in pre-tax writedowns.

The earnings quarterly report also attracted downgrading of the company's credit grades by Standard & Poor's and Fitch Ratings.

"AIG's news doesn't help sentiment [for financial stocks," Andreas Nigg, a fund manager at Vontobel Asset Management in Zurich, which oversees $39 billion worldwide, told Bloomberg.

"At the same time, oil prices continue going up, even though people keep expecting a correction. For those companies with heavy fuel costs, there's no sign of relief on the horizon."

Another report from Citigroup indicated that the firm is planning to sell around $400 billion of its non-core assets to cut costs and retain capital growth of the company.

Allianz SE dropped to its two-week low after the group reported that net income for the first quarter dipped by 65 percent led by lower profit at its insurance units as well as loss registered at Dresdner Bank.

The company's shares slumped by 1.7 percent after its quarterly profits fell to 1.15 billion euros ($1.77 billion).

In commodities and energy sector, prices of the crude oil for June delivery traded to another record level above $124 a barrel mark in New York over the rising concerns about the potential decline in the U.S. stock piles as well as rising cost of gasoline as well as food production.

Oil climbed to $124.70 a barrel, before it retreated slightly by to $124.40 a barrel on Friday morning.

The shares of airline firms including Ryanair declined by as much as 3.8 percent, followed by Air France-KLM Group down by 3.6 percent.

Shares of Petroplus Holding AG plunged by 3.8 percent after Credit Suisse Group downgraded the region's biggest independent refiner to underperform from neutral.

Meanwhile, shares of Sanofi-Aventis were lowered by 4.1 percent following a report stating that the Schweizerhall will get an approval soon for its version of the French company's Plavix blood thinner, according to The Financial Times newspaper on Friday.