* FTSEurofirst 300 index down 0.5 percent
* Oils drop, Banks gain
* Eyes on U.S. Alcoa earnings
By Christoph Steitz
FRANKFURT, Jan 12 (Reuters) - European shares were down in
in early trade on Monday, with heavyweight energy stocks taking
most points off the index, on concerns about the global economy
as well as a worse than expected earnings season lying ahead.
At 0943 GMT, the FTSEurofirst 300 <> index of top
European shares was down 0.6 percent at 861.93 points, on course
for its fourth-day of retreat. It fell 0.5 percent on Friday.
"What we see now is some kind of disillusion in the market
in the sense that the focus is now on the corporate earnings
season that lies ahead," said Joerg Rahn, senior economist at MM
Warburg.
"There are concerns that company outlooks for 2009 and 2010
could be worse than the market has priced in so far," Rahn said.
Oil stocks dropped as crude <CLc1> fell below the $40 a
barrel mark, triggered by fears about global demand on the back
of U.S. unemployment figures from Friday.
Jobless figures showed that more than half a million
Americans lost their jobs in December, making 2008 the worst
year since World War Two.
Shares in BP <BP.L>, BG Group <BG.L> and Tullow Oil <TLW.L>
were all down between 0.9-1.4 percent.
The focus will turn to the results from U.S. aluminium
heavyweight Alcoa <AA.N> earnings later in the day as investors
are expected to pour over details of any possible damage from
the recession.
Across Europe, the FTSE 100 index <> was up 0.2
percent, while Germany's DAX <> and France's CAC 40
<> were down 0.3 percent and 0.2 percent each.
FOCUS ON ECB
"This week's spotlight is on the ECB meeting. The compromise
between those on the Council who want to wait to see more
concrete transmission of past rate cuts on the economy and those
who will argue in favor of an 'act now and see' stance should
produce a tiny 25bp rate cut," UniCredit strategists wrote.
"In our view, this will make the ECB fall again behind the
curve."
Financial markets expect the ECB to cut rates by 75 basis
points, while analysts are more cautious in their estimates of
about 50 basis points.
Roche <ROG.VX> dropped 2 percent on reports that the
drugmaker is preparing a higher bid for the remainder of
Genentech, being ready to cut its year-end dividend to fund it.
The DJ Stoxx banks index <.SX7P> was the top sectoral
leader, up 0.3 percent.
Lloyds <LLOY.L> and HBOS <HBOS.L> were up 6.6 percent and
5.8 percent each, after the banks said the British state is to
take a 43.4 percent stake in the combined Lloyds TSB-HBOS bank.
Shares in Swiss bank UBS <UBS.VX> fell 5.2 percent, as
analysts pointed to weekend press reports that the company may
face heavy losses for the fourth quarter as well as a fine
following a U.S. tax investigation.
"The shares are down after reports at the weekend that they
could post a total full-year loss of 20 billion Swiss francs
($17.89 billion)," said ZKB banking analyst Andreas Venditti.
A spokeswoman for the bank on the weekend declined to
comment on the fourth-quarter result and called the report about
an expected fine "pure speculation".
(Editing by Hans Peters)
