LONDON - European stock markets lost ground Thursday for the third straight day, weighed down by a record-high euro against the dollar, high oil prices and fresh fears for the global banking sector.
In London the FTSE 100 index shed 0.31 percent to finish at 5,965.10, while in Paris the CAC 40 lost 0.32 percent to end the session at 4,859.42 points. The Frankfurt Dax gave up 0.25 percent and closed at 6,704.32 points.
The Euro Stoxx 50 index of leading eurozone shares fell 0.47 percent to 3,758.05.
Analysts said investors were left anxious by the soaring euro, which at one point jumped to a record 1.5913 dollars, and by the oil market, where crude prices stayed close to 111 dollars a barrel, not far off their record surge to 112.21 in New York on Wednesday.
A strong euro makes eurozone exports more expensive and less competitive on foreign markets while higher oil prices act as a drag on corporate activity across the board.
Market jitters were also fed by news that US investment bank Lehman Brothers had decided to liquidate three of its investment funds.
"The news from Lehman strengthened fears that the credit crisis could continue and investors were selling in order to avoid risky positions," said a trader in Frankfurt who asked not to be named.
A wave of foreclosures in the US high-risk housing market has undermined the value of billions of dollars' worth of mortgage-backed securities held by big banks in the United States and Europe.
That in turn has made banks less willing to lend, sparking a global credit squeeze.
In contrast to Europe, US stocks were higher Thursday as investors awaited the outcome of a flurry of activity centered around the Internet company Yahoo, which is attempting to thwart a hostile takeover bid from Microsoft.
Media reports have suggested Yahoo is nearing a deal with America Online to combine their Internet operations in a potential alliance that could thwart Microsoft's advances.
The software giant is seeking to take over Yahoo in a stock and cash deal originally valued at 44.6 billion dollars.
The Dow Jones Industrial Average was up 0.59 percent at 12,601.76 at mid-day while the Nasdaq composite had risen 1.48 percent to 2,356.42.
Back in London banks and finance houses were under pressure. Alliance and Leicester fell 5.80 percent to 495.50 pence while brokers ICAP lost 4.52 percent to close at 592 pence.
Among the day's winners was British Energy, which gained 5.42 percent to reach 739.50 on a report in the Financial Times that German group RWE was ready to launch an 11-billion-euro takeover offer.
In Paris the luxury sector suffered from news of the euro record. Christian Dior gave up 2.20 percent to reach 66.72 euros, LVMH fell 2.14 percent to close at 68.16 euros and PPR shed 2.63 percent to reach 84.17 euros.
Retailer Carrefour fell 3.06 percent to 46.22 euros.
In Frankfurt automaker Daimler was down 3.23 percent at 50.90 euros a day after its shareholders approved a special dividend of two euros a share.
RWE lost 2.84 percent to close at 78.70 euros on reports of its interest in British Energy, on which it had no comment.
Elsewhere there were declines of 0.35 percent to 33,522 on the SP/Mib in Milan, 0.67 percent to 13,207.9 on the Ibex-35 in Madrid, 0.39 percent to 459.48 on the AEX in Amsterdam and 1.22 percent to 7,312.65 on the Swiss Market Index.
The Bel-20 in Brussels gained 0.23 percent and closed at 3,847.20.
bur/nh/gk
04/10/2008 18:04 GMT