* FTSEurofirst 300 down 0.8 pct, reversing Tuesday's rally
* Energy shares fall on worries over U.S. oil demand
* Miners sag; BHP drops after going hostile in Potash bid
* For up-to-the-minute market news, click on []
By Blaise Robinson
PARIS, Aug 18 (Reuters) - European stocks sagged in early
trade on Wednesday, with a key index failing to stay above a
resistance level pierced in the previous day, as heavyweight oil
shares fell along with oil prices on worries over U.S. demand.
At 0802 GMT, the FTSEurofirst 300 <> index of top
European shares was down 0.8 percent at 1,047.98 points, while
the Euro STOXX 50 <> was down 0.8 percent at 2,714.68
points, retreating from the 50 percent Fibonacci retracement of
a drop from an April high to a May low tested on Tuesday.
"The market is still range-bound. Earlier this month, we
tested the upper limit of the range, and now the indexes are
poised to revisit the lower limit of the range," said Alexandre
Le Drogoff, technical analyst at Aurel BGC in Paris.
"There is no conviction at the moment and this will go on
until September when investors come back from holiday," he said.
The Euro STOXX 50, which has been confined to a range since
late April, was falling towards its 50-day moving average at
2,696.97 points, seen as the index's next big support level.
Energy shares fell as oil futures <CLc1> drifted lower to
$75.15 a barrel, not far from a one-month low touched earlier
this week, dragged by concerns over demand in the United States.
Total <TOTF.PA> was down 1.3 percent, Royal Dutch Shell
<RDSa.L> down 0.7 percent and Repsol <REP.MC> down 1.2 percent.
BP <BP.L> shed 1.4 percent. After hitting a bottom in late
June, the stock strongly recovered as the company made progress
in plugging the leaking well in the Gulf of Mexico, but it has
been retreating over the past two weeks on mounting concerns
over legal risks related to the clean-up of the leak.
MINERS DOWN
On Tuesday, two scientific reports raised fresh worries over
the environmental impact from oil spill and questioned
government assurances that most of the oil from the ruptured
well was already gone. []
Mining stocks also lost ground on Wednesday, trimming strong
gains made over the past four sessions.
Rio Tinto <RIO.L> was down 1.4 percent, Xstrata <XTA.L> down
1.5 percent, Anglo American <AAL.L> down 1.8 percent, while BHP
Billiton <BLT.L> fell 1.7 percent. The global miner went hostile
on Wednesday with its $38.6 billion takeover bid for Canadian
fertiliser group Potash Corp <POT.TO>.
But the massive bid unveiled on Tuesday -- coming in the
wake of Sanofi-Aventis's <SASY.PA> $20 billion offer for U.S
biotech firm Genzyme <GENZ.O> -- has raised hopes that a wave of
M&A deals could revive investors' appetite for equities and lift
stock indexes out of the summer doldrums.
"Many market pundits had been looking for the next
catalysts, perhaps this move from BHP will be the trigger for a
raft of M&A activity over the remainder of the year," Ben
Potter, analyst at IG Markets, wrote in a note.
"The reason being many corporates are sitting on large
hoards of cash earning very little return and may feel better
returns can be generated through corporate activity."
Around Europe, UK's FTSE 100 index <> was down 0.9
percent, Germany's DAX index <> eased 0.6 percent and
France's CAC 40 <> lost 0.9 percent.
So far this year, the FTSE 100 is down 2 percent, the DAX up
3.5 percent and the CAC down 7.7 percent. The FTSEurofirst 300
is up 0.2 percent and Euro STOXX 50, the euro zone's blue chip
index, down 8.4 percent.
(Editing by David Holmes)
