* FTSEurofirst 300 index down 0.6 percent
* Basic resources, technology leading sectoral decliners
* Eyes on Bank of England, expected to cut rates
By Christoph Steitz
FRANKFURT, Jan 8 (Reuters) - European shares were down in
early trade on Thursday, with heavyweight mining stocks taking
most points off the index, after a record drop in German exports
and weak U.S. jobless data rekindled economic worries.
At 0915 GMT, the FTSEurofirst 300 <> index of top
European shares was down 0.6 percent at 872.27 points, having
ended a six-day winning streak on Wednesday by dropping 1.3
percent. The index lost 45 percent in 2008.
"Today is a typical day on which the bad macroeconomic
sentiment drives down the whole market," said Joerg Rahn, senior
economist at MM Warburg.
"U.S. jobless claims are likely to rise later today, which,
after yesterday's weak figures, could negatively impact the
market. A positive surprise would not boost the market today,"
he said. Weekly U.S. jobless data is due at 1330 GMT.
The bleak economic outlook hit shares in raw material
producers such as steelmaker ArcelorMittal <MTP.PA> and mining
groups Rio Tinto <RIO.L> and Anglo American <AAL.L>, all of
which fell around 3 percent.
The DJ Stoxx basic resources index <.SXPP> was the top
sectoral loser, down just over 2 percent.
German exports posted a record fall in November as demand
for cars and others mainstays of the manufacturing economy
plummeted, deepening worries about the country's already bleak
2009 outlook. []
"Today's dramatic decline in exports supports those within
the ECB council who prefer to cut rates already next Thursday by
50 basis points," said Commerzbank Chief Economist Joerg
Kraemer, referring to the European Central Bank.
Shares in J. Sainsbury <SBRY.L>, Britain's third-biggest
supermarket group, were down 1.5 percent, after the company
posted third-quarter underlying sales at the top end of
forecasts but said economic conditions were set to remain
"particularly challenging" in 2009. []
Across Europe, the FTSE 100 index <>, Germany's DAX
<> and France's CAC 40 <> were down between 0.2 and
0.8 percent.
FOCUS ON BANK OF ENGLAND
The market's focus later on Thursday will be on the Bank of
England (BoE), which is expected to cut interest rates by 50
basis points to 1.50 percent. Its decision is due at 1200 GMT.
"Though we don't rule out a larger move, the BoE should cut
the repo rate by 50 basis points today and keep additional
ammunition for the coming months," UniCredit strategists wrote
in a note.
German chipmaker Infineon <IFXGn.DE> dropped 5 percent after
iSuppli said global sales of dynamic random access memory (DRAM)
chips are expected to fall 4 percent in 2009, extending their
decline for the third straight year amid a prolonged industry
downturn and chronic oversupply. []
Royal Bank of Scotland <RBS.L> gained 3.5 percent after a
newspaper report saying the bank is mulling a sale of its 4.3
percent stake in Bank of China <3988.HK> as part of a widespread
review of its international assets. []
Some strategists said 2009 looked likely to be volatile for
stock markets.
"Equities look cheap in absolute terms and very cheap
against defensive assets," Citigroup said.
"This battle between dire fundamentals and cheap valuations
will be the defining theme of 2009. We think that neither will
win out over the year, but it will be a volatile ride. This
suggests trading-range markets," the U.S. bank added.
(Additional reporting by Peter Starck; Editing by Hans Peters)
