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European stocks fall, energy firms, miners weigh

Published 06/18/2009, 07:20 AM
Updated 06/18/2009, 07:24 AM

* FTSEurofirst 300 falls 0.7 percent at midday

* Energy firms, miners drag index lower

* UK May retail sales fall unexpectedly

By Harpreet Bhal

LONDON, June 18 (Reuters) - European stocks extended losses to a fifth day at midday on Thursday, pressured by falls in energy firms and miners, while defensive tobacco and telecoms stocks gained on further risk aversion.

At 1103 GMT, the FTSEurofirst 300 was 0.7 percent lower at 839.68, near the day's low, having reversed earlier gains.

The index has fallen 4.9 percent over the past week as the rally which pushed it 30 percent higher than its lifetime low on March 9, fizzled out.

"We've gone back below a few of the major moving averages. That alone will focus the mind on the fact that there is some scope for profit-taking," said Mike Lenhoff, chief strategist at Brewin Dolphin Securities.

"The rebound that we did see from the March lows was really fast and furious and there wasn't really much pause for breath while it was underway," he said.

Oil majors took the most points off the index, though the price of crude remained above $71 a barrel, more than double their level in February.

Total, BP and Royal Dutch Shell shed between 1.1 and 0.6 percent.

Miners were also under pressure, with Anglo American, Kazakhmys, Rio Tinto and Lonmin falling between 3.1 and 0.6 percent as metals prices turned negative.

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Xstrata bucked the trend to rise 1.9 percent after an upgrade by Citi and Morgan Stanley.

UBS and Credit Suisse suffered after the Swiss National Bank said it may have to create rules to split off parts of the two dominant banks if needed to fend off risks to the economy.

UBS pared gains, and was up 0.4 percent; Credit Suisse was down 0.6 percent.

Defensive telcos, perceived as safe bets, helped provide support to the index. Vodafone was up 2.3 percent, extending recent gains, while British American Tobacco added 1.7 percent.

FALLING RETAIL SALES

In a further sign of the deteriorating economic outlook, data on Thursday showed British retail sales fell unexpectedly in May, driven by falls in clothing and footwear.

"Retail sales numbers for May came in lower than analysts had expected, throwing doubt on any near-term economic recovery. Those 'green shoots' aren't looking so green now," said Manoj Ladwa, senior trader at ETX Capital in London.

HeidelbergCement jumped 16.9 percent after the debt-laden German cement maker secured a 8.7 million euro loan restructuring plan from its banks, giving it until the end of 2011 to sell assets and cut costs to overhaul its strained finances.

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 were between 0.5 and 0.9 percent lower. Later in the session, investors will be looking at U.S. weekly jobless claims, due at 1230 GMT, for signs of the health of the U.S economy.

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(Additional reporting by Blaise Robinson in Paris; Editing by Elaine Hardcastle)

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