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Mining stocks push European shares lower

Published 05/03/2011, 05:04 AM
Updated 05/03/2011, 05:08 AM
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* FTSEurofirst 300 index down 0.4 percent

* Man Group gains as raises $1.5 bln for Japan hedge fund

* Auto stocks fall as China data weighs

* For up-to-the-minute market news, click on

By Joanne Frearson

LONDON, May 3 (Reuters) - European shares slipped on Tuesday after a strong recent run, weighed by mining stocks on the back of lower metals prices.

Analysts expected the downtrend to be short-lived, however, with recent U.S. economic data fairly positive and the majority of company earnings strong.

By 0846 GMT, the pan-European FTSEurofirst 300 index of top shares down 0.4 at 1,152.10 points after making slight gains in the previous session in thin volumes with the UK market closed following a recent rally.

"I don't think if we look at the fundamental background, we have the basis for a major sell-off, but we have come far enough in a short space of time and there could be a little consolidation," Mike Lenhoff, chief strategist at Brewin Dolphin, which has 25 billion pounds of assets under management, said.

"Investors are waiting to see how the week progresses. A lot of economic news is due out including the all important U.S. non-farm payrolls on Friday."

Traders will be focused on a slew of U.S. economic data this week including March U.S. factory orders and revised durable goods orders both due at 1400 GMT, but the main attention is on Friday's influential April U.S. jobs report.

The STOXX Europe 600 Basic Resources index fell 0.6 percent, tracking metal prices lower as investors took a cautious stance ahead of key U.S. economic data this week.

Although carmakers rose in Monday's thinly traded session on a falling oil price, a surprise contraction in Chinese PMI data on Sunday started to weigh on sentiment in the sector, traders said.

The STOXX Europe 600 Automobiles and Parts index fell 1.5 percent, with Volkswagen, BMW, Daimler and Porsche down between 1 to 2.7 percent.

Looking at individual stocks, Hannover Re, the world's third-biggest reinsurer, fell 4.2 percent after it cut its full-year profit outlook.

MAN GAINS

On the upside, Man Group, the world's largest listed hedge fund firm, gained 4.1 percent after it raised $1.5 billion for a new open-ended, computer-driven trend fund in Japan, its biggest fund launch since the financial crisis. Positive earnings news also gave some companies a boost. Geberit gained 3 percent after the Swiss sanitary company reported first-quarter profit which topped analyst expectations.

Elsewhere, a broker upgrade helped shares in German chemicals specialist Wacker Chemie, up 2.7 percent after Deutsche Bank raised the stock to "buy" from "hold". Analysts expected the market in the short-term to return to the upside.

"We have had a strong rally and I put it down to profit taking on what looks to be a fairly solid upward trend," Peter Dixon, an economist at Commerzbank, said.

"The global economy is getting back on its feet. In this environment you have all the indicators to suggest now is the time for equities."

In Europe, out of the 98 STOXX Europe 600 which have reported first-quarter results, nearly 56 percent of them have either beaten or met analysts' forecasts, with the rest coming below expectations.

Across Europe, the FTSE 100 index was up 0.3 percent, Germany's DAX was down 0.5 percent and France's CAC 40 was down 0.2 percent. (Reporting by Joanne Frearson)

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