EUROPE MARKETS: European Banks, Adidas Drop; Shell Gains

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- Banking shares fell in Europe Thursday, led by Banco Espírito Santo, amid a deluge of earnings reports.

Decliners

Banco Espírito Santo SA tanked 42% in Lisbon. The shares had been suspended earlier in the day after the Portuguese lender reported a record loss for the second quarter.

Lloyds Banking Group PLC (LYG) fell 2.8% after the U.K. lender said profit fell sharply in the first half of the year due to a number of legacy charges.

Adidas AG slumped 15% after the German sportswear retailer issued a profit warning for 2014 and pushed its targets back to 2015, citing risks surrounding Russia.

Deutsche Lufthansa AG lost 7.3% after the airline reported second-quarter earnings below expectations.

Alcatel-Lucent SA slid 6.7% after the French network-equipment maker reported a loss for the second quarter.

Metro AG gave up 6.1%. The German retailer swung to an unexpected loss in its third fiscal-quarter due to a strong euro and disposals of business units.

Telefonica SA(TEF) slipped 1.2%. The Spanish telecoms major said second-quarter profit rose 4.9%, but that revenue continued to fall in Latin America and most of Europe.

Afren PLC sank 26%. The oil-exploration company said it has suspended its chief executive officer, Osman Shahenshah, and its chief operating officer, Shahid Ullah, after discovering "unauthorized payments" potentially made for their benefit.

Gainers

Royal Dutch Shell (RDSB) rose 2.7% after the oil giant said its second-quarter profit more than doubled, as it benefited from higher liquid-petroleum prices and higher prices for specific products.

Subsea 7 SA added 1.9% after the Norwegian seabed-to-surface engineering contractor said it swung to a profit in the second quarter.

German health-care group Fresenius SE put on 3.7% after reporting a rise in second-quarter profit and raising its sales outlook.

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