* FTSEurofirst 300 index closes 0.1 pct lower
* UBS higher on upbeat statement
* Givaudan falls, dividend less than expected
By Brian Gorman
LONDON, Feb 8 (Reuters) - European shares slipped back from
29-month highs on Tuesday, after China increased interest rates
again to fight stubbornly high inflation, raising concerns about
economic growth.
Chemical makers featured on the downside. Givaudan <GIVN.VX>
slipped 3.5 percent after the flavour and fragrance maker
proposed a smaller-than-expected dividend and said high raw
materials prices would weigh on margins. []
Other stocks to fall included miners Kazakhmys <KAZ.L>, ENRC
<ENRC.L>, and Vedanta <VED.L>, down between 0.6 and 1.4 percent.
However, other miners had cut their losses by the end of the
session.
Some upbeat corporate news helped limit losses for key
indexes. UBS <UBSN.VX> rose 4.3 percent after saying it expects
to win more client money for its wealth management business in
2011 and sees a rebound in the investment banking division.
[]
The pan-European FTSEurofirst 300 <> index of top
shares fell 0.1 percent to close at 1,176.28 points, having hit
its highest close since September 2008 in the previous session.
Investors became nervous about the global recovery when
China's central bank said its benchmark deposit and lending
rates would be raised by 25 basis points. []
"The markets have been relying to some extent on emerging
markets growing for an elongated period and if that's being
called into question, that's a headwind to equity markets," said
Richard Batty, investment director at Standard Life Investments.
The European benchmark is up more than 82 percent from its
lifetime low of March 2009, with several major economies having
emerged from recession, helped by stimuli from governments and
central banks worldwide.
Batty, like most other strategists does not anticipate the
European Central Bank or Bank of England raising rates in the
near tern. The BoE announces will announce a decision on
Thursday.
"It's not clear the economy is strong enough," he said.
Across Europe, the FTSE 100 <> index ended the day 0.7
percent higher, Germany's DAX <> was up 0.5 percent and
France's CAC 40 <> was up 0.4 percent.
"Markets are overheating and face inflationary pressures,"
Philippe Gijsels, head of research at BNP Paribas Fortis Global
Markets, said.
Since U.S. Federal Reserve Chairman Ben Bernanke raised the
prospect in August that the Fed would buy more assets to boost
liquidity in the U.S. economy, stock markets have rallied.
"Now countries are taking out liquidity, markets are going
to have a much harder time," Gijsels said.
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Graphic to show asset returns since QE2 hints.
http://link.reuters.com/kyw48p
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AUTOS RISE
On the upside, carmakers were in demand, with the STOXX
Europe 600 Automobiles & Parts <.SXAP> jumping 3.3 percent.
German premium carmaker BMW <BMWG.DE> gained 4.7 percent
after group unit sales rose in January and it said it expected
strong growth to help it reach its 2011 target. []
Bullish forecasts from major car firms lifted hopes for the
sector, as the likes of Toyota <7203.T> and French parts maker
Faurecia <EPED.PA> set out new goals for 2011 based on strong
growth. []
Peugeot <PEUP.PA> rose 4.3 percent ahead of results on
Wednesday.
Swedbank <SWEDa.ST> gained 5.2 percent after the Swedish
bank said it would pay out a higher dividend than expected and
its quarterly earnings beat expectations. []
ArcelorMittal <ISPA.AS> was 2.8 percent higher after the
world's largest steelmaker forecast a faster than expected
recovery in demand. []
Rising raw material costs made a dent in earnings at the end
of 2010 for Swedish engineer Alfa Laval <ALFA.ST>, which lost
3.6 percent after forecasting flat demand in the first quarter.
[]
(Additional reporting by Joanne Frearson; Editing by Hans
Peters)
