* FTSEurofirst 300 down 2 pct; hits 3-wk closing low
* Financial, mining stocks among top decliners
* Fed's economic outlook, China data hurt sentiment
By Atul Prakash
LONDON, Aug 11 (Reuters) - European shares slipped for a
second straight session to a three-week closing low on
Wednesday, with banking and commodity shares hit hard following
the U.S. Federal Reserve's downbeat assessment of the economy.
Sentiment also worsened after figures showed that growth in
Chinese investment and factory output slowed further last month,
and the Bank of England said economic prospects were "highly
uncertain" and it was ready to move policy in either direction.
Investors' appetite for risky assets fell. German government
bonds rallied and pushed the 10-year yield to a record low,
while the VDAX-NEW volatility index <.V1XI> hit five-week highs.
The higher the index, the lower the market's desire for risk.
The FTSEurofirst 300 <> index of top European shares
finished 2 percent down at 1,040.87 points, the lowest close
since July 22 and the biggest one-day percentage fall since
early July.
"These fears of a continued slowdown in China, along with
the Fed's downbeat assessment of the U.S. economic outlook and
similar statement from the Bank of England has seen the markets
adopt a 'risk off' strategy," said Michael Hewson, analyst at
CMC Markets.
Financial stocks were among the top losers, with the STOXX
Europe 600 banking index <.SX7P> falling 3.4 percent. Standard
Chartered <STAN.L>, Barclays <BARC.L>, Lloyds <LLOY.L> and
Societe Generale <SOGN.PA> slipped 4.5 to 6.8 percent.
Macroeconomic numbers further dampened spirits. The U.S.
trade deficit widened a surprising 18.8 percent in June on a
surge of consumer goods from China and other suppliers, while
U.S. exports fell. []
"This profit taking could last a bit longer, but I don't
think that we are in for a major correction for the equity
market," said Klaus Wiener, head of research at Generali
Investments.
"The Fed is willing to support the economy. If the economy
slows but does not fall into recession as I expect, then market
confidence in the economy could improve again."
Across Europe, Britain's FTSE 100 <>, Germany's DAX
<> and France's CAC40 <> declined 2.1 to 2.7 percent.
BEARISH TECHNICALS
The Euro STOXX 50 <> index of blue chips in the euro
zone fell 2.7 percent to 2,724.16 points. It moved further away
from its 61.8 percent Fibonacci retracement level of a slide
from a high in April to a low in May.
The index finished below the 50-percent retracement of 2,738
and its 200-day moving average of 2,797, generally a bearish
signal. It may find support at around 2,670 points where its
38.2 percent retracement and a 50-day moving average hover.
"I think we are going to back down again towards this year's
lows," said Nicole Elliott, technical analyst at Mizuho
Corporate Bank.
Commodity shares also lost ground as crude <CLc1> fell 2.5
percent to trade below $79 a barrel after a report from the
International Energy Agency warned of risks to demand. Key base
metals fell 1.6 to 2.5 percent on worries about growth in the
United States, the world's biggest economy.
Miner BHP Billiton <BLT.L>, Anglo American <AAL.L> and Rio
Tinto <RIO.L> were down 3.3 to 4.7 percent, while energy company
BP <BP.L>, Royal Dutch Shell <RDSa.L> and Tullow Oil <TLW.L>
declined 2 to 2.9 percent.
Dutch food group CSM <CSMNc.AS>, which is facing higher raw
material costs, fell 1.9 percent after the world's largest
bakery supplies maker said it would raise its prices and
cautiously forecast an increase in second-half operating profit.
Abertis <ABE.MC> fell 2.3 percent after ACS <ACS.MC> said it
has struck a deal to sell a 1.7 billion euro ($2.24 billion)
stake in toll road operator Abertis to private equity fund CVC,
freeing up the Spanish builder to cut debt and pursue energy
investments. []
(Editing by Hans Peters)
