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Date: Friday 04 Jul 2008

LONDON (ShareCast) - Europe’s leading exchanges are still lower, with banks hit after Goldman Sachs issued a gloomy note on the European banking sector.

The broker lowered 2008-09 estimates for over 40 banks and said that the European banking sector may need to raise up to €90bn.

Goldman cut its rating on Spain's Santander to ‘neutral’ from ‘buy’ and slashed price targets for Deutsche Bank, Commerzbank and Deutsche Postbank.

On the upside, UBS reassured investors once again that it will not need to raise further cash. The Swiss bank said second quarter results are likely to be at or slightly below break-even, adding that there is "no need to raise new equity."

Oil stocks were lower despite soaring oil prices, with both Royal Dutch Shell and Total in the red.

Oil topped $145 overnight as investors switched from shares and rushed to crude ahead of the US Independence Day holiday.

A barrel of oil surged $1.72 to $145.29 yesterday amid a backdrop of lower global stocks and increasing tensions between Israel and Iran.

The German Dax is 37 points lower at 6,316 the French CAC dropped 47 points to 4,296, while the Swiss market fell 45 points to 6,798.

In economic news, German manufacturing orders dropped by 0.9% in May from April, according to preliminary data from the Ministry of Economics and Technology.

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