Bank shares slump on Europe, U.S. economic worry

By Joe Rauch

CHARLOTTE, North Carolina (Reuters) - U.S. bank stocks declined on Friday as investors sold off shares of some of the largest U.S. lenders amid new fears surrounding the European debt crisis and a U.S. economy showing little new growth.

The KBW Bank Index <.BKX> was off 1.2 percent in its second consecutive day of losses.

The decline was lead by Bank of America Corp <BAC.N>, the largest U.S. bank by assets, and Citigroup Inc <C.N>, the industry No. 3.

Analysts said investors were selling bank stocks because of their exposure to European and American economic worries.

"It's just shoot first and ask questions later" for investors, said Robert Patten, bank analyst with Morgan Keegan & Co Inc. "I think frustration with (European) issues are as big an issue as domestic."

BofA and Citi pay a quarterly dividend of just a penny a share. Analysts said this is pushing investors into other investments that may bring higher returns in a weaker economy.

"Their lack of dividend, and (lack of potential) for growth here, is hurting them more," said Jason Ware, equity analyst with Albion Financial Group.

BofA shares hit their lowest intraday trading level since April 2009, trading as low as $8.03 at one point. The shares were down 5.2 percent to $8.37 in midday trading on the New York Stock Exchange.

Citi shares were down 4.9 percent to $33.11 on the NYSE.

(Reporting by Joe Rauch; editing by John Wallace)

Comments

[marine1942]

04:17 PM on 08/05/2011

Not to worry as Obama will be sending his banking buddies more money soon. May not call it QE3 but it will work same way: only banks and Wall Street guys will get it. Really, do you know of anyone who got any money from QE 1&2 or Stimulus 1&2 ?? The banks will not report it and the Fed will not audit. Pretty sad how the money flows and nobody checks on it. But, GM, AOL, BAC -all Obama backers-stock hit new lows for the year. Can you say "Air America" ??