* FTSEurofirst 300 falls sharply, led by financials
* Mining sector lower on economic concerns
* All eyes on U.S. non-farm payrolls at 1230 GMT
By Joanne Frearson
LONDON, Sept 5 (Reuters) - European shares fell in early
trade on Friday, extending losses from the previous session, as
investors sold banking and mining stocks amid intensified
worries over the global economy.
At 0838 GMT, the FTSEurofirst 300 <> index of top
European shares was down 1.6 percent at 1,133.30 points.
Royal Bank of Scotland <RBS.L>, Banco Santander <SAN.MC>,
BNP Paribas <BNPP.PA> were all down between 1-3 percent and
ranked among the top negative weights on the benchmark.
European shares lost 2.6 percent on Thursday and sparked a
global equities decline after European Central Bank projections
showed a cut in growth expectations compared with their last
prognosis three months ago.
The ECB also unveiled tougher rules on the assets banks can
submit as collateral in central bank lending operations, hurting
bank stocks.
"There are also concerns following European Central Bank
President Jean-Claude Trichet'scomments that funding for the
financial sector is likely to be restricted," said Justin
Urquhart Stewart, director at 7 Investment Management.
"Investors are still shell-shocked after yesterday's comments
by Bill Gross, chief investment officer at Pimco that the
financial system was heading into becoming a financial tsunami,"
added Urqurhart Stewart.
Gross said on Thursday that the U.S. government should give
the Treasury the right to buy debt and other assets to halt a
"financial tsunami".
Miners also weighed heavily on the European index, BHP
Billiton <BLT.L>, Kazkhmys <KAZ.L>, Anglo American <AAL.L> and
Eurasian <ENRC.L> were trading down between 2.5-6.8 percent as
copper futures <MCU3=LX> slumped more than 3 percent.
Also under pressure were exporting companies hurt by a weak
euro with the automobile sector one of the weakest sectors in
Europe.
Daimler <DAIGn.DE>, BMW <BMWG.DE>, Peugeot <PEUP.PA> and
Fiat <FIA.MI> all fell 0.8-1.5 percent.
A standout loser on the FTSE was Sainsbury <SBRY.L> down 3
percent as Deutsche Bank cut its rating on the the group to
"sell" from "hold" with a price target cut to 310 pence from 335
pence.
Across Europe, Britain's FTSE <>, Germany's DAX
<> and France's CAC <> all suffered falls of around
1.5 percent.
RETAIL PAIN
Retailers in Europe were also feeling the pinch from worries
over diminished consumer spending with Carrefour <CARR.PA> and
Inditex <ITX.MC> trading between 0.8-1.4 percent lower.
"Retail will also come under pressure on concerns that
growth is slowing," said Urquhart Stewart.
Looking at the upside, Unilever <ULVR.L> gained 2 percent
as UBS upgraded its target on the group to "neutral" from "sell"
and raised its price target to 1,600 pence from 1,395.
In Germany, Metro <MEOG.DE> was the standout riser, up 0.25
percent with UniCredit saying the German retailer's market entry
in Kazakhstan, announced on Thursday, is good news.
Pharmaceutical stocks were outperforming the market as
Deutsche Bank raised its target price on AstraZeneca <AZN.L> to
2,610 pence from 2,450 pence.
Peers Sanofi-Aventis <SASY.PA> and Roche <ROG.VX> were
higher by around 0.5 percent.
The release of U.S. non-farm pay rolls will be on the
economic calender later Friday at 1230 GMT.
"Investors will be anticipating the worst for the U.S.
non-farm pay rolls. There is little reason to rally.," added
Urquhart Stewart.
U.S. private employers cut 33,000 jobs in August, according
to a private report by ADP Employer Services that may not bode
well for the non-farm payroll data. Consensus estimates peg the
number of jobs lost in August at 75,000.
(Reporting by Joanne Frearson; Editing by Sharon Lindores)
