European shares fall on debt worries; M&A in focus

                                
 * FTSEurofirst 300 falls 0.7 pct; banks, miners slip
                                
 * M&A news limits losses; Danisco jumps 26 percent
                                
 * For up-to-the-minute market news, click on [STXNEWS/EU]
                                
 By Atul Prakash
                                
 LONDON, Jan 10 (Reuters) - European shares fell for a second
straight session on Monday on caution ahead of the start of the
earnings season and on lingering worries about the euro zone
debt crisis, though merger and acquisition news limited losses.
                                
 Danisco <DCO.CO> soared 26 percent after U.S. chemicals
group DuPont <DD.N> said it would buy the Danish food
ingredients and enzymes firm for $5.8 billion to boost its
position in the fast-growing food sector. [ID:nN09219516]
                                
 At 0853 GMT, the pan-European FTSEurofirst 300 <.FTEU3> was
down 0.7 percent at 1,136.02 points. Spain's IBEX <.IBEX>,
Portugal's PSI 20 <.PSI20> and Belgium's blue-chip index <.BFX>
fell 1.3 to 2.6 percent, while the Thomson Reuters Peripheral
Eurozone Countries Index <.TRXFLDPIPU> was down 1.7 percent.
                                
 Investors kept an eye on the sovereign debt situation. A
senior euro zone source said on Sunday pressure was growing on
Portugal from Germany, France and other countries to seek
financial help from the EU and IMF to stop the bloc's debt
crisis from spreading. [ID:nLDE7080FG]
                                
 "The debt crisis is still a feature in the background. We
did see some disappointment as far as Portugal is concerned in
terms of the rates they are paying. Some other countries will
also be approaching the debt market in the near term," said
Keith Bowman, equity analyst at Hargreaves Lansdown.
                                
 "There is a lot of anticipation ahead of the results. It's
important for investors to see how companies on the ground have
performed. The actual figures will be very important for general
sentiment."
                                
 
                                
 EARNINGS IN FOCUS
                                
 U.S. aluminium giant Alcoa Inc <AA.N> is set to release
results on Monday after the market's close, launching the
quarterly earnings season. Intel <INTC.O> and JPMorgan Chase &
Co <JPM.N> will issue their report cards during the week. 
                                
 Banks were among the top losers, with the STOXX Europe 600
banking index <.SX7P> down 1.7 percent on worries about the
European debt situation. Portugal's BCP <BCP.LS> fell 5.6
percent, while KBC Groep <KBC.BR> was down 6.6 percent.
                                
 Miners also lost ground as copper prices slipped on rising
stocks. The STOXX Europe 600 Basic Materials index <.SXPP> fell
1.5 percent, while Xstrata <XTA.L> dropped 2.1 percent.
                                
 In other M&A news, Smith & Nephew <SN.L> rose 11.6 percent
after a report said it rejected a 7 billion pound ($10.9
billion) takeover approach from U.S. rival Johnson & Johnson
(J&J) <JNJ.N> late last year. [ID:nN09209396]
                                
 "There is no question that J&J has the firepower to buy
Smith & Nephew. Strategically, there would be synergies to be
extracted, within J&J's Depuy orthopaedics business as well as
J&J's wound businesses," Investec said in a report.
                                
 "It would also help J&J offset some of the pressure on its
pharmaceuticals business." 
                                
 French drugmaker Sanofi Aventis SA <SASY.PA> was down 1.1
percent. The company said on Sunday it was in discussions with
U.S. bid target Genzyme Corp <GENZ.O> over ways to value a key
Genzyme drug, in a sign the two sides are moving closer to a
deal. [ID:nLDE7080FM]
                                
 Across Europe, Britain's FTSE 100 <.FTSE>, Germany's DAX
<.GDAXI> and France's CAC 40 <.FCHI> fell 0.5 to 1.2 percent.
 (Editing by Hans Peters)