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Energy, pharma drag Europe shares down for 4th day

Published 09/03/2009, 01:03 PM
Updated 09/03/2009, 01:06 PM

* FTSEurofirst 300 ends 0.1 percent lower; down for 4th day

* Drugmakers, energy shares lose ground

* Financial shares among top gainers

* Analysts anxious for clear evidence of economic recovery

By Atul Prakash

LONDON, Sept 3 (Reuters) - European shares ended lower for a fourth straight session on Thursday, pressured by energy and pharma stocks, with analysts detecting no early resumption of the market upswing without solid evidence of economic recovery.

The FTSEurofirst 300 index of top European shares closed 0.1 percent lower at 949.82 points after trading in a wide range of 947.37-958.02. It is up 14 percent this year and has surged 47 percent since hitting a record low in early March.

Drugmakers took the most points off the index, with AstraZeneca, GlaxoSmithKline, Merck, Novartis, Novo Nordisk, Roche Holding and Sanofi-Aventis down 0.6-2.2 percent.

"We are going to see nothing but a phase of consolidation, may be for several weeks," said Mike Lenhoff, chief strategist at Brewin Dolphin.

"The survey data has been consistently positive all along and the market has been pricing all these things in anticipation of a recovery. We actually need to get a confirmation of the survey data in the real economic numbers, such as GDP figures, for the markets to move on now," he added.

Data showed the euro zone services economy jumped back almost to recovery in August and was on course to grow in this quarter led by a resurgent Germany and France.

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Energy shares also featured among top losers, with BP, Royal Dutch Shell, BG Group, Total and StatoilHydro shedding 1.0-1.2 percent.

"The rhetoric of recovery seems to have lost some of its sheen of late ... Investors will be hoping that European finance ministers will be able to devise a blueprint for a relatively painless adjustment," said Tim Hughes, head of sales trading at IG Index.

"In the meantime though, the cloud of uncertainty hovering above equities may have put an end to the raging bull market of the past months."

Britain, France and Germany said that although the world economy was stabilising, the crisis was not yet over and urged governments to implement fully their recovery plans while ensuring that they did not create the conditions for new global imbalances in the future.

FINANCIALS ADVANCE

Banks were among top gainers, with HSBC, Lloyds, Royal Bank of Scotland, UBS and Deutsche Postbank gaining 0.3-9.9 percent.

The market got some support from better than-expected-sales data from key U.S. retailers in August, but continued weakness in the labour market limited the impact.

The U.S. Institute for Supply Management said its services index rose to 48.4 in August, slightly above the 48.0 median forecast of economists surveyed by Reuters, while initial jobless claims fell to 570,000 from a revised 574,000 the week before, but that was above economists' forecast for 560,000.

Investors awaited Friday's U.S. non-farm payrolls data.

"Any signs that the U.S. labour market is still in dire straits could make the bulls minds up to cash in on their gains and even attract speculative sellers compounding a move lower," Angus Campbell, head of sales, Capital Spreads, said in a note.

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The market showed little reaction to the European Central Bank's decision to keep interest rates unchanged at a record low of 1.0 percent.

Pernod Ricard, the world's second-largest spirits group, fell 4.5 percent after it predicted a tough year as the drinks market stagnates and said it would focus on disposals and generating cash to reduce its debt pile.

British music, books and games retailer HMV fell 2.8 percent after posting a 1.8 percent fall in underlying sales for the first 18 weeks of its financial year.

Across Europe, Britain's FTSE 100 index, Germany's DAX and France's CAC 40 fell 0.4-0.6 percent. (Editing by David Cowell)

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