By Joanne Frearson
LONDON, Sept 3 (Reuters) - European shares fell on
Wednesday, led by banks and mining stocks as investors fretted
about economic growth, with Vodafone <VOD.L> a prominent loser
on a brokerage downgrade.
At 0858 GMT, the FTSEurofirst 300 <> index of top
European shares was down 0.75 percent at 1,191.09 points. The
benchmark is now down 21 percent this year, battered by a credit
crisis that has hit bank stocks especially hard.
Deutsche Bank <DBKGn.DE>, HBOS <HBOS.L>, Credit Agricole
<GAGR.PA>, and Barclays <BARC.L> were down between 1 and 4
percent with Barclays also hit by a RBS downgrade to "sell" from
"hold".
Hedge fund Ospraie Management, 20 percent owned by Lehman
Brothers <LEH.N>, announced on Tuesday it would close its
flagship fund after it plunged in August on energy and
mining-related losses.
"Financials are unlikely to do well today following the
collapse of the commodity fund and weakness in the U.S.," said
Heino Ruland, equity strategist at FrankfurtFinanz.
French bank Natixis <CNAT.PA> was more than 4 percent lower
at 5.82 euros after French newspaper Les Echos reported that the
bank could set its rights issue price at below 3 euros a share.
In the mining sector, Kazakhmys <KAZ.L>, Antofagasta
<ANTO.L>, BHP Billiton <BLT.L> and Mondi <MNDI.L> were off by
1-2 percent, tracking falls in copper futures and gold.
Vodafone fell 3 percent after Credit Suisse downgraded the
group to "neutral" from "outperform" with a price target cut to
160 pence from 180 pence.
Across Europe, Britain's FTSE <> fell 1.2 percent,
Germany's DAX <> fell 0.7 percent and France's CAC <>
lost 1 percent.
A survey showed that the euro zone's service sector shrank
in August, the job market faltered and price pressures eased
compared with July.
GOLDMAN NOTE NEUTRALISES OIL FALL
Oil shares were supported by a note from Goldman Sachs even
as crude <CLc1> deepened this week's sharp drop as traders
looked past Hurricane Gustav to focus on a wobbly global economy
and the gloomy outlook for energy demand.
BG Group <BG.L>, Total <TOTF.PA> and Petrofac <PFC.L> were
between 1-3 percent lower, but StatoilHydro <STL.OL> and BP
<BP.L> rose 1.6 and 1 percent respectively, buoyed by Goldman's
bullish comments.
Goldman Sachs added StatoilHydro to its "conviction buy"
list and upgraded BP to "buy" from "neutral" on valuation
grounds.
Goldman pointed to the 25 percent drop in the oil price
since mid-July, which it said had led the European oil sector to
underperform the market by 9 percent, adding that this offered
an attractive entry opportunity.
"Also helping the oil bears is that Hurricane Hanna is
poised to turn north, possibly avoiding the oil-producing Gulf
of Mexico," said David Evans, market analyst at
BetOnMarkets.com.
Among gainers, Cable & Wireless <CW.L> was a standout among
on the FTSE 100, up 1.2 percent after reaching a 1 billion pound
pension deal with Prudential <PRU.L>, a move Nomura said was a
step along the way to splitting up the company.
Michelin <MICP.PA> gained 0.9 percent as Credit Suisse
raised its rating on the company to "outperform" from
"underperform" with a price target rise to 58 euros from 40
euros.
Later in the session, the focus shifts to macro data from
the United States, include durable goods and factory orders at
1400 GMT.
"What investors will be looking for later in the day will be
U.S. factory orders which is expected to be grim. Investors will
be also focusing on the Beige book," said Ruland.
(Editing by Quentin Bryar)
