European shares led lower by BT; RBS rallies

[MILAN] European shares fell in early trading on Thursday with BT leading declines after the UK phone company reported disappointing results and announced plans to cut thousands of jobs.

Gains in RBS following a multi-billion deal to settle a US investigation of the bank's bond sales, and a solid update from Italy's biggest bank UniCredit buoyed the banking sector, helping the pan-European STOXX 600 limit losses to 0.1 percent.

BT shares fell 6.7 per cent after saying it was cutting 13,000 jobs, the latest attempt by Britain's biggest telecoms group to rebuild after an accounting scandal and a downturn in trading.

Traders said its latest results showed revenue and dividend short of expectations while its full-year guidance disappointed.

RBS rallied 5.2 per cent after it agreed to pay a smaller-than-expected US$4.9 billion to resolve a US investigation into its sale of mortgage-backed securities.

Its gains helped the UK's FTSE index edge ahead 0.1 per cent, outperforming other European bourses ahead of a Bank of England policy meeting expected to keep interest rates on hold.

Among other country benchmarks, Italy's FTSE MIB fell 0.6 per cent, as bond yields jumped to a seven-week high on an increased possibility that a government of anti-establishment parties will take power.

REUTERS