* FTSEurofirst 300 up 0.3 pct after 8-week closing low
* Financial shares among top losers, energy stocks up
* For up-to-the-minute market news, click on []
By Atul Prakash
LONDON, Nov 30 (Reuters) - European shares drifted higher on
Tuesday from the previous day's eight-week closing lows, though
persistent worries that the debt crisis could spread to other
weak euro zone countries forced investors to stay cautious.
At 0955 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.3 percent at 1,072.66 points. On
Monday, it dropped 1.6 percent, the lowest close since early
October as Ireland's bailout failed to calm jittery investors.
Energy shares featured among the top gainers, with the STOXX
Europe 600 Oil & Gas <.SXEP> index up 0.8 percent. Total
<TOTF.PA> rose 1.2 percent after the firm said it got approval
for the second phase of its North Sea project. BG Group <BG.L>
gained 1.7 percent, while Repsol <REP.MC> was up 1 percent.
"The increase we are seeing this morning is merely technical
from short-term oversold levels and comes on the back of the
little rebound from the lows we saw yesterday evening on Wall
Street," said Philippe Gijsels, head of research at BNP Paribas
Fortis Global Markets, in Brussels.
The FTSEurofirst 300 has slipped 4.6 percent in three weeks,
with its relative strength index (RSI) currently at 41. A move
towards 30 is an indication that an asset may be getting
oversold, while a level of 70 signals overbought conditions.
"Looking forward, things remain quite uncertain and
volatility is likely to persist and even increase. There seems
to be no quick fix for the worries in the euro zone," Gijsels
said, adding that Ireland's bailout did not bring spreads down.
Analysts said there was still too much debt in the system
and the market was expected to continue to see an investment
environment with a lower average return and higher volatility.
Financial shares were among the top losers, with the STOXX
Europe 600 banking index <.SXPP> falling 0.8 percent. Banco
Santander <SAN.MC>, Allied Irish Banks <ALBK.I> and Natixis
<CNAT.PA> fell 1.4 to 5 percent.
"Sentiment remains very fragile, with difficulties in Europe
still dominating and investors quick to book profits," said
Keith Bowman, equity analyst at Hargreaves Lansdown.
RISK APPETITIE FALLS
Appetite for risky assets fell further, with the VDAX-NEW
volatility index <.V1XI>, one of Europe's main barometers of
investor anxiety, rising 0.5 percent. The index has surged 29
percent in three sessions. The higher the index, the lower the
market's desire to take risk.
The euro hit a 10-week low against the dollar, yen and Swiss
franc. The premiums investors demand to hold Spanish and Italian
sovereign bonds over German debt hit their highest since the
euro's launch as an 85 billion euro deal for Ireland on Sunday
failed reassure investors.
"The attempt of European politicians so far is one of trial
and error. Poor data in combination with continued concern on
the European debt situation could result in a much more severe
sell-off," said Koen De Leus, strategist at KBC Securities.
The Thomson Reuters Peripheral Eurozone Countries Index
<.TRXFLDPIPU> was down 1.3 percent. Britain's FTSE 100 <>,
Germany's DAX <> and France's CAC 40 <> were flat to
up 0.5 percent, while Ireland's ISEQ <.ISEQ>, Spain's IBEX
<>, Portugal's PSI 20 <> and Italy's FTSE MIB
<.FTMIB> fell 0.4 to 0.6 percent.
Germany's largest construction group Hochtief <HOTG.DE> rose
3 percent after German markets regulator BaFin gave the go-ahead
for Spanish rival ACS's <ACS.MC> hostile takeover offer.
[]
(Editing by Hans Peters)
