* FTSEurofirst 300 falls 2.5 pct to 949.52
* Focus returns to economy after Obama election victory
* Phamaceuticals, oils lead decline
By Rebekah Curtis
LONDON, Nov 5 (Reuters) - European stocks lost 2.5 percent
early on Wednesday, breaking six straight days of gains as oil
and pharmaceutical shares fell and investor focus returned to
the economy after Barack Obama's election as U.S. president.
At 0949 GMT the pan-European FTSEurofirst 300 index was 2.5
percent lower 949.52. European stocks ended the previous session
up 4.3 percent at 974.15 points, hitting a one-month closing
high.
Analysts said that an Obama win had been largely priced in
after six days of gains for European shares.
The index has lost 37 percent so far this year. The new
Obama administration, which takes office in January, will face
the world's worst financial crisis since the Great Depression,
and a potentially steep downturn in the global economy.
"He (Obama) has no easy job," said Heinz-Gerd Sonnenschein,
equity strategist at Postbank in Bonn, Germany. "Today we are
looking at what may come from the economic side...A lot of
problems are ahead with the housing market in the U.S. and with
the global economy cooling too," he added.
"Volatility may cool a little bit but for the whole market I
see...more potential on the downside."
Pharmaceuticals were the heaviest drag on the index,
shedding their recent gains. GlaxoSmithKline <GSK.L> lost 4.9
percent, Novartis <NOVN.VX> dropped 4.3 percent and Roche
<ROG.VX> went down 3.7 percent.
Among oil shares, BP <BP.L>, Royal Dutch Shell <RDSa.L> and
Total <TOTF.PA> all dropped about 3 percent as crude fell nearly
4 percent to below $68 a barrel. Shell traded ex-dividend on
Wednesday, adding to the downward pressure on that stock.
Around Europe, Britain's FTSE 100 <> lost 2.6 percent,
Germany's DAX <> shed 2 percent and France's CAC <>
lost 2.7 percent.
In Asia, Japan's Nikkei rose 4.5 percent. Major U.S. stock
indexes rose between about 3 and 4 percent with the biggest
Election Day rally ever on Tuesday as a backdrop.
BOE, ECB EYED
Investor attention in Europe turned to the European Central
Bank and the Bank of England, which are both widely expected to
slash borrowing costs on Thursday, following a recent string of
rate cuts from policy-makers around the world.
The BoE and ECB are both expected to cut rates by at least
half a percentage point, Reuters polls showed.
Banks stocks also fell on Wednesday. BNP Paribas shed 3.3
percent after saying its third-quarter net profit more than
halved due to higher provisions tied to the financial crisis.
HSBC <HSBA.L> lost 1.7 percent and BBVA <BBVA.M> was 1.9
percent lower.
Shares in Allied Irish Banks <ALBK.I> tumbled 8 percent
after it cut its full-year earnings forecast, increased its bad
debt charge expectations and cancelled its 2008 cash dividend to
raise capital ratios.
But recently battered shares in Royal Bank of Scotland
<RBS.L> rose 3.2 percent.
The world's largest steelmaker ArcelorMittal <ISPA.AS> dived
13.5 percent after it forecast weaker fourth-quarter earnings,
cut production further and put its growth plans on hold in the
face of a global economic slowdown.
Miners also dragged on the index, with Vedanta Resources
<VED.L>, Kazakhmys <KAZ.L> and Rio Tinto <RIO.L> shedding
between 8.2 and 10.2 percent.
(Editing by Chris Wickham)
