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Date: Friday 04 Jul 2008

LONDON (ShareCast) - European markets were led lower by banking shares, which were friendless today 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.

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." However, this did not stop the shares from joining in the sector’s decline.

Luxury goods maker LVMH fell pry to profit taking ahead of its interim results next week..

Higher oil prices depressed heavy fuel users such as airlines Lufthansa and Continental.

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 closed 81 points lower at 6,272, the French CAC dropped 77 points to 4,266, while the Swiss market fell 71 points to 6,772.

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.

CAC 40 - Risers
Essilor Intl. (EF) € 38.55 +0.71%
EDF (EDF) € 58.09 +0.45%

CAC 40 - Fallers
Lvmh (MC) € 63.30 -5.27%
Eads (EAD) € 11.48 -5.05%
Suez (SZE) € 40.81 -4.04%
Dexia (DX) € 9.65 -3.40%
Saint Gobain (SGO) € 36.60 -3.23%
Cap Gemini (CAP) € 36.59 -3.20%
Schneider Electric (SU) € 65.50 -3.16%

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