European shares slip as banks retreat

Paris - European shares fell on Wednesday, with financials hit after global regulators fined five banks for failings in currency trading, while supermarket chain J. Sainsbury dropped after announcing plans to cut prices.

Sainsbury's fell 5.5% after saying it aimed to cut spending heavily, rein in its property expansion and find more efficiencies to pay for lower prices.

"The majority of the key metrics reported remain in negative territory," Richard Hunter, analyst at Hargreaves Lansdown, said. "The rise of the discounters continues as they edge their way into consumer consciousness and Sainsbury's declaration of 'investment' in price cuts will inevitably eat into revenues."

READ: Sainsbury's to cut capex and costs

The Sainsbury report dampened sentiment towards other retailers, with rival Tesco down 2.7% and Marks & Spencer dropping 0.7%.

The European retail index fell 1.1%.

The European banking index slipped 1.3% after global regulators imposed penalties totalling $3.4bn on UBS, Citigroup, HSBC, Royal Bank of Scotland and JP Morgan.

READ: Hefty fines for five major banks

HSBC was down 0.9%, while Frankfurt-listed shares of JPMorgan and Citi were down 0.7% to 0.8%. UBS bucked the trend, up 0.2%, with traders saying the fine had been already taken into account.

Barclays fell 2%. The British bank, a major player in the foreign exchange market, had been expected to be part of the settlement but Britain's Financial Services Authority (FCA) said its investigation was continuing.

"The fact that Barclays has delayed a settlement on this probe keeps the uncertainty," a London-based trader said.

At 13:46, the FTSEurofirst 300 index of top European shares was down 0.7% at 1 348.89 points after gaining in the previous two sessions. The index remained within the tight trading range seen since late October.

Italian bank UniCredit was down 3.1% and peer Banco Popolare, which announced a net loss of €121.7m for January to September late on Tuesday, dropped 3.5%.

The utilities sector was led lower by a 4.2% decline in Italy's Enel after it lowered its debt-reduction target for 2014 and reported a slight drop in nine-month core earnings. The utilities index fell 1.6%.

Oil services group SBM Offshore jumped 17.6% after it settled with Dutch prosecutors for $240m over an inquiry into suspected improper payments to government officials.