European stocks falter on poor bank results

European stock markets slid on Thursday following a clutch of disappointing earnings updates from the region's banks and ahead of interest rate decisions and elections in Britain. London's benchmark FTSE 100 index fell 0.47 percent to 5,956.35 points in late morning deals. Frankfurt's DAX 30 dropped 0.19 percent to 7,359.14 points and in Paris the CAC 40 index shed 0.73 percent to 4,013.46. The Stoxx 50 index of leading eurozone companies retreated 0.83 percent to 2,927.74 points. London "has been hampered after disappointing first-quarter results from Lloyds," said Manoj Ladwa, senior trader at ETX Capital. Britain's state-rescued Lloyds Banking Group reported on Thursday a net loss of £2.4 billion after setting aside a vast sum to compensate clients who were mis-sold payment insurance. The lender's share price slumped 7.96 percent to 53.41 pence in London trade. The net loss after tax of £2.4 billion (2.7 billion euros, $4.0 billion) for the three months to March 31 compared with a net profit of £169 million in the first quarter of 2010, LBG said in a results statement. LBG, 41-percent owned by the taxpayer, said it was allocating £3.2 billion to cover payouts to customers who were mis-sold payment protection insurance. In Paris, Societe Generale slumped 4.10 percent to 43.68 euros after the lender announced first-quarter net profits of 916 million euros ($1.36 billion), a 13.8 percent drop on the same period last year. That included a writedown of 239 million euros for the reevaluation of its own financial liabilities. Meanwhile, "traders eyes remain transfixed on interest-rate decisions due out of the Bank of England and European Central Bank," said Joshua Raymond, an analyst at trading group City Index. "Whilst the market is not expecting a change in rates from either decision, the market is of course wary of surprises." The next European Central Bank interest rate rise is at least a month away, analysts said, as ECB policymakers met in Finland on Thursday after Portugal became the third eurozone country to accept a financial rescue. Rising inflation will probably lead to higher lending rates in June or July, but the ECB's current benchmark of 1.25 percent looked safe for now as 78 billion euros in loans for Lisbon spotlighted the eurozone's debt woes. In London, the Bank of England is likely to keep interest rates at a record low level on Thursday as policymakers contemplate stagnant economic growth and lower consumer price inflation, according to economists. The British central bank's rate-setting monetary policy committee is forecast to hold its key lending rate at 0.50 percent, where it has stood since March 2009, amid renewed worries about the strength of the economy. Also on Thursday, Britons appeared set to reject a change in the way they elect their lawmakers as they voted in a national referendum that has threatened to tear the ruling coalition apart. Vitriolic campaigning for the vote opened up a rift between the centre-right Conservative party and the smaller Liberal Democrats just one year after they joined forces in an unlikely political marriage. Opinion polls indicate a landslide win for the campaign led by Conservative Prime Minister David Cameron to keep Britain's long-standing first past the post system, in which the candidate with the most votes wins. His deputy Nick Clegg, the leader of the centrist Lib Dems, looks set for a humiliating defeat in his campaign to introduce the alternative vote (AV), in which candidates are ranked by preference.