LONDON, Sept 1 (Reuters) - European shares ended lower on Monday as weaker crude and metals prices hit commodity stocks and Commerzbank's <CBKG.DE> $14.5 billion deal to buy Allianz's <ALVG.DE> Dresdner Bank unit dragged down banking shares.
The FTSEurofirst 300 index of top European shares <.FTEU3> closed down 0.45 percent at 1,189.35 points, slipping on the first day of the month after gaining 1.2 percent in August, only its second positive month in the previous 10.
The pan-European index is down 21 percent this year, hit by big losses at banks due to the credit crisis and slowing global economic growth.
Miners were the top weighted sectoral loser on the index, tracking a sharp decline in metal prices. Copper fell 2.6 percent under pressure from gains in the dollar, rising stocks and worries about demand. Other base metals also slipped.
BHP Billiton <BLT.L>, Anglo American <AAL.L>, Vedanta Resources <VED.L>, Lonmin <LMI.L>, Kazakhmys <KAZ.L>, Xstrata <XTA.L>, Antofagasta <ANTO.L> and Rio Tinto <RIO.L> fell between 1.4 and 5.8 percent.
Energy shares also dropped because of a 3.4 percent fall in crude oil prices after concerns that Hurricane Gustav would cause severe damage to the U.S. oil sector eased as the storm failed to pick up strength.
BP <BP.L>, Royal Dutch Shell <RDSa.L>, gas producer BG Group <BG.L>, Cairn Energy <CNE.L> and Tullow Oil <TLW.L> shed between 1.5 and 4.4 percent.
The weaker crude price put pressure on energy stocks, but was seen positive for companies and broader markets as it lowered inflation concerns. European shares pared losses in the afternoon session with a decline in crude prices.
'Whilst some traders feel that Europe has outperformed other global equity markets and a sell-off is therefore possible, the $6 reversal in the price of oil has encouraged some follow through buying,' said Paul Chesterton, senior trader at CMC Markets.
Across Europe, Britain's FTSE <.FTSE> was down 0.6 percent, Germany's DAX <.GDAXI> fell 0.01 percent and France's CAC <.FCHI> was down 0.2 percent.
U.S. markets are closed for the Labor Day holiday.
BANKS UNDER PRESSURE
Banks remained in negative territory as investors said Commerzbank's acquisition of Dresdner was overpriced. Commerzbank shares slid 10 percent, while Allianz <ALVG.DE> closed nearly flat.
Commerzbank <CBKG.DE> has agreed to buy Dresdner Bank from Allianz <ALVG.DE> in a $14.5 billion all-German deal that will break the country's banking mould and cost 9,000 jobs.
Other banks also weakened, with UBS <UBSN.VX> losing 1 percent, Deutsche Bank <DBKGn.DE> dropping 0.2 percent and Postbank <DPBGn.DE> falling 0.7 percent.
Global economic and financial uncertainty also weighed on the sector, with investors trading cautiously.
'We still see a number of headwinds posed by the overall macroeconomic outlook in Europe,' said Jonathan Lawlor, head of European research firm Fox-Pitt, Kelton.
'And that still leaves a lot of uncertainties on how the slowdown will feed back into the operating profitability of the financial segment.'
A poor economic outlook persists, with European factory activity shrinking in August. The euro zone recorded its third straight month of contraction despite input cost relief from the sharp retreat in oil prices.
Britain's economic downturn was likely to be deeper and longer than expected and could be the worst for 60 years, finance minister Alistair Darling said on Saturday.
Among individual stocks, GDF Suez <GSZ.PA>, Europe's largest and newly created utility, rose 1.5 percent after posting 20 percent higher first-half profits.
French tyremaker Michelin <MICP.PA> was a standout gainer, rising 5.4 percent as traders cited a Merrill Lynch upgrade.
(Additional reporting by Joanne Frearson; editing by Rory Channing) Keywords: MARKETS EUROPE STOCKS ============================================================= For rolling updates on what is moving European shares please click on [STXNEWS/EU] ============================================================= For pan-Europeanmarket data and news, click on codes in brackets: European Equities speed guide...................<EUR/EQUITY> FTSEurofirst 300 index..............................<.FTEU3> DJ STOXX index......................................<.STOXX> Top 10 STOXX sectors...........................<.PGL.STOXXS> Top 10 EUROSTOXX sectors......................<.PGL.STOXXES> Top 10 Eurofirst 300 sectors...................<.PGL.FTEU3S> Top 25 European pct gainers.......................<.PG.PEUR> Top 25 European pct losers........................<.PL.PEUR> Main stock markets: Dow Jones...............<.DJI> Wall Street report .....[.N] Nikkei 225.............<.N225> Tokyo report............[.T] FTSE 100...............<.FTSE> London report...........[.L] Xetra DAX.............<.GDAXI> Frankfurt market stories[.F] CAC-40.................<.FCHI> Paris market stories...[.PA] World Indices......................................<0#.INDEX> Reuters survey of world bourse outlook..........<EQUITYPOLL1> Western European IPO diary...........................[WEU/IPO] European Asset Allocation.........................[EUR/ASSET] Reuters News at a Glance: Equities...............[TOP/EQE] Main currency report:...............................[FRX/] Keywords: MARKETS EUROPE STOCKS/ =2 tf.TFN-Europe_newsdesk@thomson.com ak COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
The FTSEurofirst 300 index of top European shares <.FTEU3> closed down 0.45 percent at 1,189.35 points, slipping on the first day of the month after gaining 1.2 percent in August, only its second positive month in the previous 10.
The pan-European index is down 21 percent this year, hit by big losses at banks due to the credit crisis and slowing global economic growth.
Miners were the top weighted sectoral loser on the index, tracking a sharp decline in metal prices. Copper fell 2.6 percent under pressure from gains in the dollar, rising stocks and worries about demand. Other base metals also slipped.
BHP Billiton <BLT.L>, Anglo American <AAL.L>, Vedanta Resources <VED.L>, Lonmin <LMI.L>, Kazakhmys <KAZ.L>, Xstrata <XTA.L>, Antofagasta <ANTO.L> and Rio Tinto <RIO.L> fell between 1.4 and 5.8 percent.
Energy shares also dropped because of a 3.4 percent fall in crude oil prices after concerns that Hurricane Gustav would cause severe damage to the U.S. oil sector eased as the storm failed to pick up strength.
BP <BP.L>, Royal Dutch Shell <RDSa.L>, gas producer BG Group <BG.L>, Cairn Energy <CNE.L> and Tullow Oil <TLW.L> shed between 1.5 and 4.4 percent.
The weaker crude price put pressure on energy stocks, but was seen positive for companies and broader markets as it lowered inflation concerns. European shares pared losses in the afternoon session with a decline in crude prices.
'Whilst some traders feel that Europe has outperformed other global equity markets and a sell-off is therefore possible, the $6 reversal in the price of oil has encouraged some follow through buying,' said Paul Chesterton, senior trader at CMC Markets.
Across Europe, Britain's FTSE <.FTSE> was down 0.6 percent, Germany's DAX <.GDAXI> fell 0.01 percent and France's CAC <.FCHI> was down 0.2 percent.
U.S. markets are closed for the Labor Day holiday.
BANKS UNDER PRESSURE
Banks remained in negative territory as investors said Commerzbank's acquisition of Dresdner was overpriced. Commerzbank shares slid 10 percent, while Allianz <ALVG.DE> closed nearly flat.
Commerzbank <CBKG.DE> has agreed to buy Dresdner Bank from Allianz <ALVG.DE> in a $14.5 billion all-German deal that will break the country's banking mould and cost 9,000 jobs.
Other banks also weakened, with UBS <UBSN.VX> losing 1 percent, Deutsche Bank <DBKGn.DE> dropping 0.2 percent and Postbank <DPBGn.DE> falling 0.7 percent.
Global economic and financial uncertainty also weighed on the sector, with investors trading cautiously.
'We still see a number of headwinds posed by the overall macroeconomic outlook in Europe,' said Jonathan Lawlor, head of European research firm Fox-Pitt, Kelton.
'And that still leaves a lot of uncertainties on how the slowdown will feed back into the operating profitability of the financial segment.'
A poor economic outlook persists, with European factory activity shrinking in August. The euro zone recorded its third straight month of contraction despite input cost relief from the sharp retreat in oil prices.
Britain's economic downturn was likely to be deeper and longer than expected and could be the worst for 60 years, finance minister Alistair Darling said on Saturday.
Among individual stocks, GDF Suez <GSZ.PA>, Europe's largest and newly created utility, rose 1.5 percent after posting 20 percent higher first-half profits.
French tyremaker Michelin <MICP.PA> was a standout gainer, rising 5.4 percent as traders cited a Merrill Lynch upgrade.
(Additional reporting by Joanne Frearson; editing by Rory Channing) Keywords: MARKETS EUROPE STOCKS ============================================================= For rolling updates on what is moving European shares please click on [STXNEWS/EU] ============================================================= For pan-Europeanmarket data and news, click on codes in brackets: European Equities speed guide...................<EUR/EQUITY> FTSEurofirst 300 index..............................<.FTEU3> DJ STOXX index......................................<.STOXX> Top 10 STOXX sectors...........................<.PGL.STOXXS> Top 10 EUROSTOXX sectors......................<.PGL.STOXXES> Top 10 Eurofirst 300 sectors...................<.PGL.FTEU3S> Top 25 European pct gainers.......................<.PG.PEUR> Top 25 European pct losers........................<.PL.PEUR> Main stock markets: Dow Jones...............<.DJI> Wall Street report .....[.N] Nikkei 225.............<.N225> Tokyo report............[.T] FTSE 100...............<.FTSE> London report...........[.L] Xetra DAX.............<.GDAXI> Frankfurt market stories[.F] CAC-40.................<.FCHI> Paris market stories...[.PA] World Indices......................................<0#.INDEX> Reuters survey of world bourse outlook..........<EQUITYPOLL1> Western European IPO diary...........................[WEU/IPO] European Asset Allocation.........................[EUR/ASSET] Reuters News at a Glance: Equities...............[TOP/EQE] Main currency report:...............................[FRX/] Keywords: MARKETS EUROPE STOCKS/ =2 tf.TFN-Europe_newsdesk@thomson.com ak COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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