* FTSEurofirst 300 index down 0.7 pct
* Banks fall, HSBC may need to raise capital
* Miners down as Rio Tinto cuts output
By Joanne Frearson
LONDON, Jan 14 (Reuters) - European shares fell back in
early trade on Wednesday as gains in energy stocks were
overshadowed by falls in the banks and mining sectors.
By 0932 GMT, the FTSEurofirst 300 <> index of top
European shares was down 0.7 percent at 834.58 points after
being up as much as 844.9 points earlier.
"We started a bit higher, but now it is coming down. It is
still a market driven between hope and fear. On the one hand you
have the stimulus packages, Obama getting into office next week
and the ECB hopefully cutting again tomorrow," said Philippe
Gijsels, strategist at Fortis Bank.
"On the other hand you continue to have dismal economic
figures and the start of the earnings season which could see
companies disappointing."
Banks were the biggest losers on the index. HSBC <HSBA.L>
lost 5.9 percent as Morgan Stanley analysts said it may have to
raise as much as $30 billion in capital and halve its dividend
as earnings are likely to deteriorate more than expected.
[]
Barclays <BARC.L> fell 4.8 percent. It said it was cutting
over 2,100 jobs across its investment banking and investment
management (IBIM) units, or about 7 percent of their staff, a
person familiar with the matter said. []
BNP Paribas <BNPP.PA>, Commerzbank <CBKG.DE> and Banco
Santander <SAN.MC> were down between 1.5 percent and 3.2
percent.
Overnight, U.S. Citigroup <C.N> agreed to merge its Smith
Barney brokerage with Morgan Stanley's <MS.N> wealth management
unit, and is expected to make further asset sales to raise
capital and to isolate toxic assets from the rest of the bank.
[]
Miners fell back as metal prices retreated with copper
<MCU3=LX> down 1.1 percent.
Rio Tinto <RIO.L> lost 1.5 percent after the group said it
would cut diamond output at its Argyle mine in Western Australia
and slow its underground mine development as part of its plan to
slash spending and cut net debt by $10 billion this year.
[]
Anglo American <AAL.L>, Antofagasta <ANTO.L>, BHP Billiton
<BLT.L> and Xstrata <XTA.L> were 1.3-2.4 percent lower.
Across Europe, the FTSE 100 <> index was down 1.2
percent, Germany's DAX <> was 0.7 percent lower and
France's CAC 40 <> was down 0.6 percent.
ENERGY GAINS AS CRUDE RISES
Energy stocks were the biggest risers on the index as crude
<CLc1> rose over 3 percent to around $39 a barrel as OPEC kept
up its talk of production cuts and as a cold snap in the United
States boosted heating oil demand.
BP <BP.L>, Royal Dutch Shell <RDSb.L> and Total <TOTF.PA>
were up between 0.1 percent and 1.3 percent.
Drug makers were higher as investors turned to the safety of
defensive stocks. AstraZeneca <AZN.L>, GlaxoSmithKline <GSK.L>
and Sanofi-Aventis <SASY.PA> were up between 0.6 percent and 0.7
percent.
Later in the session, investors will eye U.S. retail sales
for December at 1330 GMT. Economists in a Reuters survey expect
a 1.2 percent fall compared with a 1.8 percent fall in November.
"U.S. retail sales have been extremely poor and are likely
to continue to be so. But, I think expectations now have been
put into such a position where people are expecting to hear bad
news, the slightest levelling off will be greeted with some
relief," said Justin Urquhart Stewart, director at Seven
Investment Management.
(Reporting by Joanne Frearson; editing by Simon Jessop)
