(updates with full report)
MILAN (Thomson Financial) - Share prices closed lower, depressed by worries the European Central Bank will raise its interest rates in July and renewed fears of a U.S. recession after the latest macroeconomic data, brokers said.
The Mibtel index lost 2.16 percent to 24,635 points and the S&P/Mib was down 2.42 percent to 31,754.
Volume traded was an estimated 4.223 billion euros.
The market accelerated its fall during the afternoon part of the session.
Brokers said the market belatedly reacted to ECB president Jean-Claude Trichet's comments on Thursday on a possible 25 basis point rise in euro zone interest rates when the ECB meets next month.
Inflation pressures, including higher commodity prices, are also likely to push up U.S. interest rates, with one broker seeing a U.S. interest rate rise in the fourth quarter of the year.
Macroeconomic data was negative for equities with brokers pointing to Friday's German retail data and this afternoon's U.S. jobs figures.
One broker said company earnings estimates still have to be downgraded, particularly in the bank sector and cyclical industries.
Financials were on the negative side, led by Mediolanum, down 5.65 percent to 3.31 euros, Banca Popolare di Milano down 5.19 percent to 6.63, and Fondiaria-SAI off 5.14 percent to 22.72.
Banco Popolare fell 4.95 percent to 11.94.
Unicredit fell 3.85 percent to 4.16. JP Morgan said worries over its capital ratios are overdone. Intesa Sanpaolo lost 3.34 percent to 3.92.
Among industrials, Fiat fell 4.50 percent to 12.94. Finmeccanica was down 2.82 percent to 18.61. The company reappointed Pier Francesco Guarguaglini as the company's chairman and CEO.
Brokers said the Finmeccanica reappointment was not a surprise. A possible capital increase of 1.4 billion euros to fund the DRS Technologies acquisition is seen as higher than previous estimates for 1 billion euros.
Safilo lost 9.88 percent to 1.605 on negative broker comment on the appointment of Massimiliano Tabacchi to the post of CEO. Tabacchi is the son of Vittorio Tabacchi, the company's main owner.
In the same sector, Luxottica lost 4.36 percent to 17.16.
Telecom Italia fell 4.00 percent to 1.39.
Mediaset lost 1.08 percent to 5.05. Milan bank Mediobanca rated the stock 'outperform', citing the stock's low fundamental valuation, dividend yield, and prospects for consumer spending pick-up.
Oils and utilities remained supported by the oil price, more stable earnings and dividend yields.
One broker said lack of investment by oil companies over a lengthy period and continued strong demand means there is little scope for the oil price to come down much in the medium term.
Prysmian rose 1.34 percent to 18.58. The cable maker supplies the energy sector. Oil services companies were higher. Saipem was up 0.56 percent to 28.73. Tenaris added 0.44 percent to 20.43.
Eni lost 0.94 percent to 25.21. Enel was off 1.48 percent to 7.075. nigel.tutt@thomsonreuters.com nt/slj/nt/slj COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
© 2008 AFX News
