European shares fell today as financial shares succumbed to fresh concern about the extent of the credit crisis, while speculation surfaced of a possible counterbid by Rio Tinto for rival BHP Billiton.
Mining shares fell in line with a drop in the price of copper but BHP Billiton rose 2 per cent on the counterbid talk, which stemmed from a report in the Wall Street Journal.
The Iseq was also down this morning with the three main banks, AIB, Bank of Ireland and Irish Life and Permanent all marginally down at 9.45am.
Across Europe financial shares were dragged lower by Royal Bank of Scotland and Dexia, which reported a near 30 per cent drop in third-quarter net profit.
By 9.05am the FTSEurofirst 300 index of top European shares was down 0.62 per cent at 1,496.60 points, having touched a two-month low of 1,494.30 points.
The index is on track for its third weekly successive fall and is up less than 1 per cent so far this year as the credit crunch has hurt profitability at major banks and spooked investors.
"We're now focused on the issue of (the global liquidity crisis) entering the broader economy and therefore when it enters the broader economy, you start seeing a greater effect of the slowdown," said Justin Urquhart Stewart, a director at 7 Investment Management.
"The focus will still be on very defensive areas with the brave trying to pick those areas which have been oversold," he said.
Among leading gainers was BHP Billiton, which rose 1.5 per cent, followed by oil firms Eni and Total which rose between 0.3 and 0.8 per cent as the price of crude oil futures rose 0.4 per cent to near $94 a barrel.
RBS was among the top-weighted losers on the FTSEurofirst, falling nearly 3 per cent, while HSBC fell 0.9 percent and HBOS was down 2 per cent.
RBS shares have fallen 6 per cent in the last two trading days, as it has not commented on speculation it will provide some clarity on its trading position before its scheduled update in early December.
This week has seen a number of major banks including Barclays, Goldman Sachs and Bank of America seek to reassure investors over the extent of their exposure to products linked to US subprime loans.
But global equities were jolted overnight by Wells Fargo, the second-largest US mortgage lender, warning the housing slump was far from over and was the worst since the Great Depression.