European stocks slipped on Wednesday as investors remained jittery about the financial sector after Lehman Brothers posted a quarterly loss and announced steps to restructure the company.
At 1224 GMT, the FTSEurofirst 300 index of top European shares was down 1% at 1,143.95 points. The index has lost about 24% so far this year.
Lehman said it planned to sell a majority stake in its investment management division and spin off commercial real estate assets as the struggling U.S. investment bank fought to raise capital.
"It would have been more significant to see fresh capital rather than sell off assets. Although there is no bad news, it does not get Lehman out of the woods and the banking sector is likely to be disappointed," said Bernard McAlinden, market strategist at NCB Stockbrokers in Ireland.
The fourth-largest U.S. investment bank said it has reduced exposure to toxic assets, including cutting its residential mortgage exposure by nearly half, and cut its dividend.
Lehman, a casualty of the U.S. subprime mortgage crisis, brought forward the release of the initiatives and its results by a week after its shares sank as much as 46% on Tuesday on growing concern over its ability to raise capital.
Banks were the top negative weight on the European index, with Dexia down 5%, Royal Bank of Scotland falling 2.3%, Barclays slipping 6.8% and UBS shedding 2.6%.
"While the banking sector is down, they have not given up all the gains … following what has happened in the U.S. mortgage market. There has been a rotation into the financials away from resources," said Darren Winder, strategist at Cazenove.
"However, there are still deep issues in the sector so we will see down days. They are likely to face some pressure from softening economic situation," Winder said.
COMMODITY STOCKS SLIP
Stocks markets around the world jumped on Monday as investors applauded Washington's move to rescue embattled mortgage firms Fannie Mae and Freddie Mac. But the rally was short-lived and U.S. stocks sank on Tuesday on rising fears over the faith of Lehman Brothers.
Across Europe, Britain's FTSE fell 1.6% on Wednesday, while both Germany's DAX France's CAC were down 1%.
Mining shares also slipped on negative market sentiment and a decline in metals prices.
BHP Billiton, Anglo American, Vedanta Resources, Lonmin, Kazakhmys, Xstrata, Antofagasta and Rio Tinto fell between 2.4 and 9.8%.
Oil stocks also reversed earlier gains. BP, Royal Dutch Shell, gas producer BG Group and Tullow Oil shed between 0.5 and 1.3%.
Among individual stocks, French drugmaker Sanofi-Aventis rose 4.5% on expectations Chief Executive Gerard Le Fur would be replaced by GlaxoSmithKline executive Chris Viehbacher.
Peers GlaxoSmithKline gained nearly 1% and Novartis was up 0.8%.
