Investing.com - The European financial sector was on the back foot in midday trade on Thursday, after Societe Generale (PA:SOGN) warned that tough market conditions would hit its quarterly results.
The French bank said it expects revenue in its global markets and investor services business to have fallen by around 20% in the fourth quarter. While Wall Street also had a generally tough time in markets at the end of last year, U.S. banks have the benefit of higher interest rates and a stronger domestic economy. They're consequently generating much better returns on their traditional lending businesses.
SocGen shares were down by around 4.5% in Paris, and the news also hit the shares of rivals BNP Paribas (PA:BNPP) and Credit Agricole (PA:CAGR), which fell 2.8% and 1.2% respectively.
"I have a preference for the U.S. banks. SocGen shows how tough things are for European banks," said Jerome Schupp, fund manager at Geneva-based investment firm Prime Partners.
The pan-European Stoxx 600 Bank Index was down by around 0.9% by 6:40AM ET (11:40 GMT). The sector declined 28% in 2018 as a slowdown in the Euro-zone economy pushed back expectations of when the European Central Bank will raise its key interest rate back above zero.
-- Reuters contributed to this report