* FTSEurofirst 300 ends 1.5 pct lower
* Auto stocks tumble after Daimler, Renault cut forecasts
* TNT plunges 16 pct on report FedEx talks called off
By Blaise Robinson
PARIS, July 24 (Reuters) - European stocks fell on Thursday,
surrendering most of the previous day's gains as cuts in annual
forecasts from Daimler <DAIGn.DE> and Renault <RENA.PA> hit
autos and weakening commodities dragged oils and miners lower.
Credit Suisse <CSGN.VX> surged 5.3 percent after posting
forecast-beating earnings, but this failed to spark a rally in
the banking sector <.SX7P>, which lost 0.6 percent.
Dutch mail company TNT NV <TNT.AS> plunged 16 percent in
late trade after the Wall Street Journal reported that takeover
talks with FedEx <FDX.N> had ended.
The FTSEurofirst 300 <> index of top European shares
closed 1.5 percent lower at 1,170.80 points. The index, which is
down 22 percent year-to-date, rose 2.1 percent on Wednesday.
"I think that it's more than profit-taking today. The
recovery of the last few days was a kind of market illusion,"
said Victor Peiro Perez, head of strategy at Caja Madrid Bolsa.
"With high short-selling pressure and a fall in oil prices,
it was normal to see a rebound, but earnings are sending mixed
signals and we think that it will be difficult for the European
markets to really recover in the short term," he said.
"Consumer spending in Europe will fall just as it has been
falling in the U.S., and corporate earnings forecasts will be
reduced by analysts."
Shares of automakers got hammered after both Daimler and
Renault cut their forecasts, quashing hopes for the troubled
sector that had emerged on Wednesday when PSA Peugeot <PEUP.PA>,
Volkswagen <VOWG.DE> and Fiat <FIA.MI> stuck to their targets.
Daimler sank 9.6 percent, Peugeot <PEUP.PA> fell 7.2
percent, and Renault dropped 3.4 percent.
Miners took a beating, with Rio Tinto <RIO.L> down 3.8
percent and Xstrata <XTA.L> down 6.1 percent, as nickel tumbled
to a two-year low on weakening demand and copper retreated on
concerns over global economic growth.
Heavyweight energy shares also fell as U.S. crude oil
futures hovered around $124 a barrel after hitting a seven-week
low. BP <BP.L> fell 1.8 percent and Repsol <REP.MC> lost 3
percent.
The recent sharp drop in oil prices has fuelled a relief
rally in equities over the past few days as the fall eased
inflation fears and worries over corporate costs, but analysts
warn that it doesn't mean stocks have reached a floor for the
year.
"The central swing factor for the coming months will
probably be the further development of the oil price," Gerhard
Schwarz, head of global equity strategy at UniCredit, wrote in a
note.
"Based on the assumption that the oil price will settle at
levels of around $125, we see chances for higher equity prices
at the end of the year, but the continued presence of major risk
factors argues for renewed setbacks in the coming months. For
that reason, we do not think the danger of new lows for the
year has been averted yet."
On the macro front, weekly U.S. data showing a
larger-than-expected increase in the number of people filing for
unemployment benefits, as well as data showing a fall in U.S.
existing home sales in June added to the gloom.
Around Europe, Germany's DAX index <> lost 1.5
percent, UK's FTSE 100 index <> dropped 1.6 percent and
France's CAC 40 <> fell 1.4 percent.
British Energy <BGY.L> rose 6.2 percent. The nuclear
operator said its long running takeover talks had reached an
advanced stage.
French retailer and luxury goods group PPR <PRTP.PA> gained
5.3 percent after posting second-quarter sales above analyst
expectations.
(Editing by Erica Billingham)
