Europe slips on insurer woes

Oil stocks rise in Europe as tension grows in the Middle East

LONDON, England (CNN) -- European markets ended mostly lower on Monday as declines in the insurance sector and a weak opening on Wall Street undercut gains in oil stocks, which were spurred by rising Middle East tension.

London's FTSE 100 rose 0.9 percent to 4,044.3 while the CAC 40 blue chip index in Paris closed 0.5 percent lower at 3,141.95 and Frankfurt's electronically traded Xetra Dax was down 1.7 percent to 3,305.06 in late trading (the German market was set to close at 1800 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was off 0.2 percent, with the insurance and computer sub-sectors among the biggest losers. Oil and gas, and mining stocks were higher.

"Oils have been buoyed by the crude price which remains at high levels on fears of U.S. intervention in Iraq," Ignace De Coene, an equity manager at Fortis Investment Management, told Reuters.

Oil prices have been rising on concerns that military action in the Gulf could disrupt crude supplies. (Full story) However, Brent crude for November delivery slipped 41 cents to $28.26 a barrel in midday London trading on Monday.

The UK's BP (BP) rose 2.4 percent to 469.61 pence, while Shell Transport & Trading (SHELL) -- which owns 40 percent of Royal Dutch/Shell Group -- gained 2.9 percent to 412 pence and Royal Dutch -- which owns the rest of the group -- rose 1.6 percent to 44.15 euros. France's TotalFinaElf (PFP) added 0.7 percent to 141.50 euros.

Insurers fell sharply after Swiss Life was down 12.4 percent to 159 Swiss francs in Zurich -- but up slightly from its morning lows. Early on Monday, Switzerland's largest life insurer said it would raise between 900 million and 1.2 billion Swiss francs. Swiss Life has seen its reserves, which it uses to meet claims, dwindle as stocks markets plunge, while its loss-making Swiss group life business has also been a drain on finances. (Full story)

Axa (PCS), Europe's second largest insurer, fell 3.5 percent to 12.16 euros. Dutch insurer Aegon regained its morning losses to closed flat at 11 euros after its main shareholder said it would sell a 25 percent stake in the company, raising about 3.85 billion euros. (Full story)

"The European market now faces a heavy load of rights issues. Insurance and telecoms are the obvious fund raisers, but the pressure could easily spread to industrials, transport, hotels, media and luxury goods,'' said investment bank HSBC Securities in a note.

"Clearly the current surge in rights issues is more about despair than hope, more about restructuring than growth. We expect the weight of the rights issues, among other factors, to cause the European equity market to revisit its July lows over the next month or two.''

MobilCom (AMOB), Germany's fifth largest mobile phone company, was up ... 195 percent to 3.30 euros in late Frankfurt trading -- off its morning highs -- after the government threw a lifeline on Sunday, announcing 400 million euros ($391 million) in loans. (Full story)

The company, which was dumped by France Telecom on Friday, had been expected to file for insolvency this week and announce the loss of 5,000 jobs.

France Telecom (PFTE), Europe's second largest phone operator, fell 2.4 percent to 10.10 euros in Paris, giving up earlier gains. On Saturday, the French government said it would give the group a cash injection as part of a rescue plan to pull it out of debt. (Full story)

Vodafone (VOD), Europe's largest mobile phone company, rose 1.9 percent to 92 pence in London after the Sunday Times said it was considering raising its offer to £9 billion for France's Cegetel in a move to capture BT's (BT) stake. (Full story)

Vodafone has already offered about £8 billion for the 85 percent of Cegetel it does not own, but BT is holding out for more money for its 26 percent stake, the newspaper said. Vodafone owns 15 percent of Cegetel, the French fixed line group that controls 80 percent of mobile phone operator SFR, but wants to buy the rest to enhance its European exposure.

Media giant Vivendi Universal (PEX) rose 0.4 percent to 13.25 euros on reports it would meet bankers on Wednesday in Paris to discuss a 3 billion euros loans, as well as an announcement that Vivendi's smaller rival Lagardere was interested in buying its French publishing unit.

Lagardere (PMMB) added 1.5 percent to 37.30 euros. Also on Monday, it said that first-half net profits fell sharply to 104.2 million euros ($102 million) due to a significant drop in exceptional gains stemming from its stake in aerospace giant EADS. (Full story)

Swiss, Switzerland's national airline which was formed after Swissair collapsed last year, fell 9.9 percent to 32 Swiss francs after it reiterated that it expected its 2002 loss to be narrower than anticipated after beating first-half revenue targets. (Full story)

The AEX index in Amsterdam rose ... percent and the SMI in Zurich was up ... 0.7 percent, while Milan's MIB30 index gained ... 1.1 percent.

In the U.S. on Monday, markets were lower in early trading as a threat of U.S.-led military action against Iraq continued to rattle investors. Stocks also came under pressure after Merrill Lynch and Prudential Securities both cut earnings estimates for several chipmakers.

Trading is expected to be lighter than usual in observance of Yom Kippur, the Jewish day of atonement.

At 1030 EST, the Nasdaq composite was down 14.96 points to 1,276.94 and the Dow Jones industrial average was 28.99 points lower at 8,283.70, after an initial swing into positive territory. The Standard & Poor's 500 index was down 7.10 points to 882.71.