* FTSEurofirst 300 loses 0.8 pct, down for 4th day in a row
* Merrill Lynch's fresh writedowns hit banking shares
* Oil producers rise after BP's forecast-beating results
By Blaise Robinson
PARIS, July 29 (Reuters) - European stocks fell in early
trade on Tuesday, hit by renewed fears over the beleaguered
financial sector after Wall Street investment bank Merrill Lynch
<MER.N> unveiled a $5.7 billion writedown related to bad debt.
But the losses were limited by rising energy stocks, buoyed
by forecast-beating quarterly results from BP <BP.L> and as oil
prices advanced. BP gained 2.7 percent, Total <TOTF.PA> rose 1.3
percent and Royal Dutch Shell <RDSa.L> added 1.5 percent.
At 0815 GMT, the FTSEurofirst 300 <> index of top
European shares was down 0.8 percent at 1.149.37 points,
retreating for the fourth session in a row, and tracking sharp
losses in Asia and on Wall Street overnight.
Banks were among the biggest losers, with UBS <UBSN.VX> down
6.3 percent, Royal Bank of Scotland <RBS.L> down 6.4 percent and
BNP Paribas <BNPP.PA> down 4.1 percent.
"The news from Merrill brings more uncertainty to the
market. I don't think it's the end of the bad news. At this
point, what rules the market is not the corporate results we're
getting, but sentiment, and the lack of trust," said Rik
Zwaneveld, trader at AFS Brokers.
Merrill Lynch said late on Monday it would take a $5.7
billion third-quarter writedown as the investment bank unloads
huge amounts of risky debt, and will raise $8.5 billion by
selling new stock.
Merrill, whose Frankfurt-traded stock <MER.F> was down 2.8
percent at 0815 GMT, said it has agreed to sell $30.6 billion of
collateralized debt obligations (CDOs), a kind of repackaged
debt, to an affiliate of private equity fund Lone Star Funds,
for just $6.7 billion, or about 22 cents on the dollar.
The announcement came less than two weeks after Merrill
posted a $4.9 billion quarterly loss, hit by $9 billion of
writedowns.
"We'll certainly see more writedowns stemming from debt
products, but also what the market hasn't acknowledged yet is
the looming writedowns in stock portfolios. We had a glimpse of
that on Friday with Munich Re," Zwaneveld said.
European insurance shares tumbled on Friday after Munich Re
<MUVGn.DE> issued a profit warning, blaming turbulent equity
markets.
The FTSEurofirst 300 has lost nearly 24 percent so far in
2008, hit by stagflation fears as well as rising concerns over
the impact of the credit crisis that has forced banks to unveil
massive asset writedowns and emergency capital increases.
On the upside on Tuesday, Alcatel Lucent <ALUA.PA> gained 4
percent after announcing the departure of both its chairman
Serge Tchuruk and its Chief Executive Pat Russo.
"It is a good thing that the company can now move forward
and put behind it the differences between the Lucent parts and
Alcatel side. They must now look for someone from the outside
who can get on with the task of building an integrated company,"
said Exane BNP Paribas analyst Alexander Peterc.
SAP AG <SAPG.DE> rose 5.8 percent after the German software
maker said it now expects to reach the upper end of its 2008
targets and reported a slightly better-than-expected 21 percent
rise in key second-quarter sales.
Dutch chemical group Akzo Nobel NV <AKZO.AS> sank 12 percent
after saying second-quarter core profit fell 3 percent and cut
its 2008 profit outlook, citing slowing economic growth, rising
materials prices and a strong euro.
Around Europe, both Germany's DAX index <> and
France's CAC 40 <> were down 1 percent, while UK's FTSE 100
index <> was down 0.1 percent, helped by rising
commodity-related stocks.
(Additional reporting by Julien Toyer; Editing by Erica
Billingham)
