* FTSEurofirst falls 2.75 pct, dragged down by commodities
* Global recession fears overshadow financial woes
* Focus on earnings season, fear for profit outlook
By Sarah Marsh
FRANKFURT, Oct 22 (Reuters) - European shares fall on
Wednesday as global recession worries mounted, with commodity
stocks weighing heavily on the benchmark index, tracking weaker
oil and copper prices.
At 0856 GMT, the FTSEurofirst 300 <> index of top
European shares was down 2.75 percent at 898.51 points, with
basic resources and energy stocks the top losers.
Vedanta Resources <VED.L> slumped 9.7 percent, Xstrata
<XTA.L> dropped 8.3 percent, and BHP Billiton <BLT.L> fell 7.3
percent.
The FTSEurofirst 300 has lost 40 percent so far this year,
punctured by a credit crisis that has piled up the losses at
banks and slowed the economy.
Commodity stocks tracked sliding commodity prices, which
fell foul of gains in the dollar and continuing worries about
demand in light of the global economic slowdown. Oil <CLc1> was
4 percent lower and copper <MCU3=LX> was down by more than 5
percent to its weakest in three years.
In addition, BHP Billiton was the latest mining company to
warn Chinese demand was set to weaken, although it showed little
sign of trimming production. []
"The old "story" that has been put aside in the recent
period of financial market crisis now comes back to the market's
mind: recession fears," Commerzbank said in a note.
Fears of a global recession overshadowed signs that
government attempts across the world to end the financial crisis
may be bearing fruit.
French banking stocks were outstanding gainers in Europe,
after France on Monday outlined plans to lend 10.5 billion euros
to the country's top six banks before the year end to prop up
their capital reserves. []
BNP Paribas <BNPP.PA> rose 2.5 percent and Societe Generale
<SOGN.PA> was up 2 percent.
EARNINGS SEASON LOOMS
A flurry of disappointing earnings in the United States on
Tuesday dragged Wall Street down overnight and heightened
worries worldwide about the deteriorating profit outlook.
"What we are seeing now is the transformation of the rather
positive stance of the corporate sector into a negative stance,
as the economy already did," said FrankfurtFinanz analyst Heino
Ruland.
"The combination of disappointing earnings, plus bleak
guidance, plus the pressure from hedge funds will effectively
lead to the last sell-out in the fourth quarter of this year."
In Europe, shares in Alfa Laval <ALFA.ST> fell 6.5 percent
in early trade, paring losses to remain 3 percent down, after
the Swedish engineering group reported a third-quarter core
profit just below market expectations.
The firm said it expected fourth-quarter demand in line with
or somewhat lower than last year.
However, there were some positive exceptions to the overall
gloom. Dutch telecoms group KPN <KPN.AS> reported third-quarter
earnings above market consensus and announced a 1 billion euro
share buyback programme, sending its stock 2.9 percent higher.
Handelsbanken <SHBa.ST> shares rose 1.9 percent after the
Swedish bank's third-quarter operating profit exceeded analysts'
expectations.
European companies due to report later in the day include
drugmaker GlaxoSmithKline <GSK.L> and building materials group
Saint-Gobain <SGOB.PA>.
(Additional Reporting by Peter Starck; Editing by Quentin
Bryar)
