European shares started well, hitting a fresh 12-month high, but they slipped after quarterly results from US banking giants Goldman Sachs and Citigroup failed to live up to investors’ expectations.
Both reported robust profits but the market had been looking for better. Hopes for the financial sector had been boosted by Wednesday’s much stronger than expected numbers from JPMorgan Chase. In Frankfurt, analyst Oliver Roth explained how it is the banks are making money: “The banks are enjoying perfect conditions right now. Almost zero interest rates in the US, minimal interest rates in Europe and that encourages them to invest even in risky business and make good, solid money out of it. So, the big profits for the banks are not surprising. But that doesn’t mean that the banks are out of the woods yet.” The results from mobile phone giant Nokia pulled down technology stocks. Nokia itself slumped nearly 11 percent. Lower metals prices hit mining companies. Sainsbury soared 10 percent due to fresh speculation that its biggest shareholder Qatar may try again to take over the UK supermarket chain.