Euro Shares Slide, Hit by Swiss Re

European shares declined, dragged down by a 28-percent collapse in shares of reinsurer Swiss Re and bleak economic data on both sides of the Atlantic, which bode ill for corporate earnings.

The pan-European FTSEurofirst 300 index closed down 0.1 percent at 810.49, though that was well above its intraday low just above 792.

Swiss Re tumbled 28 percent after the company posted a full-year net loss of about 1 billion Swiss francs and said U.S. investor Warren Buffett's Berkshire Hathaway was investing 3 billion Swiss francs ($2.63 billion) in the company.

Swiss Re wrote down twice that amount in toxic assets and said it would consider further equity raising of up to 2 billion francs.

Deutsche Bank fell 4.2 percent after Germany's biggest lender posted a net loss of almost 4 billion euros and predicted a bleak future.

"There is not much in the way of good news except that the news was not worse than expected," Fox-Pitt Kelton said in a note, adding: "The outlook statement was hardly encouraging."

Swiss bank UBS lost 6.5 percent and Societe Generale of France dropped 5.7 percent. The DJ Stoxx bank index fell 1.4 percent.

Europe's stock markets shrugged off expected monetary policy decisions by The Bank of England, which cut its base rate by half a percentage point to a record low 1 percent, and the European Central Bank, which left its key interest rates unchanged.

ECB President Jean-Claude Trichet warned of persistent weakness in coming quarters and economic data painted a grim picture.

In the U.S., the number of U.S. workers filing new claims for jobless benefits jumped to a 26-year high last week.

German industry orders slumped 28 percent in December, and Spanish industrial production fell by almost a fifth in December, the largest decline on record.

"Given the development of order intake, production and sales will fall significantly in Q1 compared to Q1 last year and most of the industrial heavyweights will report losses," brokerage Steubing said in a note on the German data.

German industrial companies' second-quarter earnings would also be weak, Steubing said.

"It is unclear how much damage the first two quarters of this year will do to the quality of balance sheet — i.e., to what levels equity capital will fall," Steubing said, adding this meant it would be premature to re-enter the stock market now.

Commerzbank said higher share prices "are only possible once there is more evidence that the recession will come to an end."

Citigroup said global corporate earnings were "only a quarter of the way through an expected 50 percent drop."

"To be able to call a meaningful turn in global equities we need to be closer to the bottom in the corporate earnings cycle," Citigroup said, adding that was more likely in 2010.

Fortis Investments was more upbeat, its strategist Joost van Leenders saying: "All the doom and gloom has not pushed markets to below the lows of Nov. 20, 2008 ... we expect economic stabilization in the second half of the year, which should be positive for equities."

Thursday's close leaves the FTSEurofirst 300 index 6.5 percent above its 2008 low set in late November.

Shares in Unilever lost 6 percent after the Anglo-Dutch consumer goods group scrapped all its targets due to global economic uncertainty, despite beating forecasts with a 7.3 percent rise in fourth-quarter underlying sales.

Among gainers, BG Group climbed 10 percent after the British gas producer reported quarterly profits above expectations and gave a buoyant outlook for future growth.

TUI Travel, Europe's biggest travel firm, rose 8 percent after the company said it was well positioned to perform in line with its expectations for the current year.

Stock-market performance around Europe was uneven with London's FT-SE 100-share index closing flat and Frankfurt's Xetra Dax index edging up 0.4 percent while the France's CAC 40-share index lost 0.1 percent and Zurich's SMI tumbled 2.3 percent.

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