* FTSEurofirst 300 index down 1.6 pct
* Banks, commods slip
* Novo Nordisk gains as profits rise
By Joanne Frearson
LONDON, Jan 29 (Reuters) - European shares fell 1.6 percent
early on Thursday to snap a three-day winning streak, dragged
down by the banking and commodity sectors.
By 0934 GMT, the FTSEurofirst 300 <> index of top
European shares was down 1.6 percent at 793.58 points.
"It's a bit disspointing, still got a recession to get
through and a financial system that is still dysfunctional. I
think the market is a bit disappointed by the FOMC statement
last night," said Mike Lenhoff, strategist at Brewin Dolphin.
"I think what the market had been expecting that the
statement might show a greater readiness to step in the U.S.
Treasury market, but it indicated it was not quite ready to do
so, which might have caused a bit of disappointment. There is
going to be an awful lot of debt which the market going to have
to inject which could keep upper pressure on yields," he said.
Banks took the most points off the index after a strong
rally in the previous session. HSBC <HSBA.L>, BNP Paribas
<BNPP.PA>, UBS <UBSN.VX> and Banco Santander <SAN.MC> were down
2.6-7.2 percent.
The Wall Street Journal, citing people familiar with the
matter, said that U.S. government officials seeking to revamp
the financial bailout have discussed spending another $1
trillion to $2 trillion to help restore banks to health.
[]
On Wednesday, President Barack Obama scored his first major
legislative victory with passage of an $825 billion economic
stimulus package by a sharply divided U.S. House of
Representatives on a 244-188 vote. []
"The package is an encouraging sign, but in itself it does
not solve anything," said Justin Urquhart Stewart, director at
Seven Investment Management.
European Central Bank President Jean-Claude Trichet told CNN
that the ECB had not excluded cutting interest rates below the
current level of 2 percent.
Mining stocks were under pressure as copper <MCU3=LX> fell
2.2 percent. Xstrata <XTA.L> lost 10.2 percent after the group
said it planned to raise about $5.9 billion through a
heavily-discounted two-for-one rights issue of new stock.
[]
Anglo American <AAL.L>, Antofagasta <ANTO.L>, BHP Billiton
<BLT.L>, Eurasian Natural Resources <ENRC.L> and Rio Tinto
<RIO.L> were down 1.4-6.7 percent.
The world's No. 1 steelmaker ArcelorMittal <ISPA.AS> slipped
4.8 percent. Japanese peer Nippon Steel Corp <5401.T> and
world's No.2 steelmaker cut its profit outlook for this year by
a bigger-than-expected 36 percent as a slump in car sales hits
its mainstay autosheet business. []
Energy stocks were in the doldrums. Energy stock Royal Dutch
Shell <RDSa.L> fell 0.6 percent after it said fourth-quarter
current cost of supply (CCS) net profits fell 28 percent
compared to the same period in 2007, to $4.79 billon as crude
prices collapsed. []
BG Group <BG.L>, BP <BP.L> and Total <TOTF.PA> were down
1-1.6 percent.
Across Europe, the FTSE 100 <> index was down 1.7
percent, Germany's DAX <> was 1.6 percent lower and
France's CAC 40 <> was down 1.6 percent.
NOVO NORDISK GAINS
Denmark's Novo Nordisk <NOVOb.CO> rose 1 percent after the
group posted a higher-than-expected 38 percent rise in 2008
operating profit on strong insulin sales and increased its
long-term operating margin target. []
AstraZeneca <AZN.L> was 1.9 percent higher ahead of fourth
quarter and full year results due out at 1100 GMT.
On the downside, Deutsche Telekom <DTEGn.DE> fell 2.5
percent after the group said the decline in its traditional
fixed-line business continued last year but it reached its
target for new DSL broadband customers. []
Later in the session, investors will watch U.S. weekly
jobless claims and December durable good orders for further
clues on the health of the U.S. economy.
(Editing by Hans Peters)
