* FTSEurofirst 300 down 0.6 pct
* Banks fall, tracking weakness in U.S. financials
* Danone lifts 2008 margin target; stock rises
* Belgacom sinks after cutting 2008 margin target
By Dominic Lau
LONDON, July 25 (Reuters) - European shares fell early on
Friday, tracking steep losses in the U.S. and Asian markets
after weak U.S. housing and jobs data raised fresh concerns
about the health of financial firms and the global economy.
Banks were the biggest drag on the FTSEurofirst 300 <>
index of top European companies, which was down 0.6 percent at
1,163.45 points by 0758 GMT. The pan-European index lost 1.5
percent on Thursday.
Credit Agricole <CAGR.PA> shed 4.2 percent, Royal Bank of
Scotland <RBS.L> dropped 4.3 percent and Barclays <BARC.L> lost
4.7 percent.
UBS <UBSN.VX> fell 5.7 percent after New York State sued the
Swiss bank, accusing it of committing a "multi-billion dollar
fraud" by steering broker clients into auction-rate securities
that became impossible to sell once the credit market tightened.
"I don't see the rally is over. This rally is only a week
old," said Darren Winder, equity strategist at Cazenove.
"Even during a rally, the market doesn't go up every day. So
(after) a setback in the U.S. financials last night following a
very strong bounce from their lows, we are taking a step back
today. But we will take another two steps forward before this
rally is over."
U.S. financial companies, which have incurred huge losses
from the housing slump, slid after data from the National
Association of Realtors showed June sales of existing homes hit
a 10-year low. An index of U.S. bank stocks <.BKX> fell 6.7
percent, after rising about 40 percent over the past week.
Disappointing news on the U.S. housing sector and steep
losses on Wall Street also weighed on the dollar.
Oil shares, however, tracked higher crude prices <CLc1>,
with BP <BP.L>, Royal Dutch Shell <RDSa.AS>, and Total <TOTF.PA>
up between 0.7 and 1.7 percent.
DANONE RISES, BELGACOM SINKS
Danone <DANO.PA> was among the top gainers, rising 4.8
percent after the food producer lifted its 2008 operating margin
target and confirmed 2008 sales and EPS growth outlook.
Infineon <IFXGn.DE> slipped 0.6 percent after it said it
would cut staff by 10 percent amid continuing tough market
conditions even as it beat market expectations with a 97 percent
rise in third-quarter core operating profit.
Infineon's unit Qimonda <QI.N> narrowed its operating loss
in the third quarter but sales slumped on declining prices.
Within the tech sector, STMicroelectronics <STM.PA>, ASML
<AMSL.AS>, Nokia <NOK1V.HE> and Ericsson <ERICb.ST> were down
0.7 to 1.3 percent.
U.S. durable goods orders and new home sales for June, due
at 1230 GMT and 1400 GMT respectively, may also give some
impetus.
Scania <SCVb.ST> eased 0.3 percent ahead of its first-half
results due later in the day, while peer truck maker Volvo
<VOLVb.ST> was down 2.1 percent.
New European registrations of all categories of commercial
vehicles fell 8.7 percent in June, with a 5.6 percent rise in
new EU member states partly offsetting a 10.3 percent fall in
western Europe, the ACEA industry association said.
Belgacom <BCOM.BR> topped the percentage losers on the
FTSEurofirst 300 index, down 8.2 percent after it cut its 2008
sales forecast amid pressure on mobile call prices and a gloomy
economic environment.
British retailer Marks & Spencer <MKS.L> sank 5.5 percent
after a report showed rising costs and depressed demand could
reshape Britain's retail industry over the next 10 years, with
bankruptcies and job losses set to rise as companies struggle to
adapt.
Dutch mail company TNT NV <TNT.AS> reversed losses of almost
4 percent in early trade, to gain 3.3 percent after traders
cited several positive analyst notes reiterating "buy" ratings
on the stock owing to its long-term prospects.
(Editing by Quentin Webb)
