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Europe stocks close lower; banks, commods weigh

Published 08/11/2009, 11:45 AM
Updated 08/11/2009, 11:48 AM
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LONDON, Aug 11 (Reuters) - European shares closed lower on Tuesday as U.S. economic data disappointed investors, with banking and commodity stocks weighing the most on the main index.

The pan-European FTSEurofirst 300 index of top shares provisionally closes down 1.3 percent at 931.95 points, losing for the second day in a row after hitting its highest close in more than nine months on Friday.

"We have had a couple of macro figures which did not please the market. The U.S. labour costs and productivity figures are worrying ... they simply mean that there are enormous constraints on the consumer who are suppose to bail us all out of this," said Heino Ruland, strategist at Ruland Research.

"Industy is just slashing costs all over the place ... it means final demand may not be strong enough," he said.

Banks took the most points off the index. French bank Natixis slumped 17.7 percent after the firm's parent BCPE bank tells French market regulator AMF it does not plan to delist the shares of Natixis.

Commodity stocks were lower as crude fell 2.4 percent and copper slipped 0.7 percent on demand concerns. Oil major BP lost 0.6 percent, while Rio Tinto and BHP Billiton dropped 1.6 and 1.5 percent, respectively.

U.S. unit labour costs, a gauge of inflation and profit pressure closely watched by the Federal Reserve, fell 5.8 percent, the biggest decline since the second quarter of 2000, while non-farm productivity in the second quarter rose at its fastest pace in six years. Investors were also disappointed as inventories at U.S. wholesalers plummeted 1.7 percent in June, the tenth straight monthly drop, which drove stocks to their lowest level in more than two years, Commerce Department reported. (Reporting by Joanne Frearson)

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