European stocks fell on Friday, racking up their first weekly loss in a month, after another round of downbeat financial earnings and a record high oil price weighed on the broader market. The FTSEurofirst 300 index fell 1.3 percent to 1,342.68 points, having fallen earlier by as much as 1.86 percent. This was the largest one-day fall in a month and snapped a three-week rally in the index. Banks were the largest drag on the market, even though much of the negative news for financials was confined to the insurance sector. US insurer AIG reported a record-breaking $7.8 billion quarterly loss on Thursday and financials were hurt by the prospect of big asset sales by Citigroup. “We've had a couple of announcements, be it AIG after the bell yesterday or Allianz today or Swiss Re the day before, showing the aftermath of the financial crisis is still to show up in bank accounts, that's raised the question of how much capital needs to re raised to restore their Tier One capital ratios,” said Heino Ruland, a strategist with FrankfurtFinanz. Allianz, Europe's largest insurer, said its Dresdner Bank until had posted a quarterly operating loss of 453 million euros, about the same level as the fourth quarter. Allianz said it could not give a meaningful forecast for earnings at the bank because of financial market uncertainty. This comes at the end of a dismal week for Europe's insurers. Axa and Aegon both disappointed investors with their results, while Munich Re, Old Mutual, Royal & Sun Alliance warned market conditions would be tough. The DJ Stoxx index of European insurers fell 3.5 percent this week and is down nearly 10 percent this year. AXA was down 1.9 percent, Swiss Re lost 2.5 percent, and Royal & Sun Alliance fell 3.1 percent. Allianz shares were down 1 percent, having fallen earlier by as much as 2 percent. But miner Kazakhmys was the worst loser in Europe, falling 6.7 percent after rejecting a takeover offer from rival Eurasian Natural Resources Corp. Citigroup, the largest US bank, said it aimed to sell $400 billion of assets - nearly 20 percent of its total - over the next two to three years to become more efficient and profitable. “Over the past weeks, investors got the feeling that the credit crisis was easing, but a piece of news like that is sort of a wake-up call that reminds us that the storm is far from over,” said an analyst.
