* FTSEurofirst 300 falls 0.2 pct
* Glaxo leads drugmakers lower
* Banks edge higher after stress tests
* For up-to-the-minute market news, click on []
By Brian Gorman
LONDON, July 26 (Reuters) - European shares slipped back on
Monday morning, with GlaxoSmithKline <GSK.L> leading drugmakers
lower on reports it is interested in buying Genzyme <GENZ.O>,
although banks gained following the results of stress tests.
At 0855 GMT, the FTSEurofirst 300 <> index of top
European shares was down 0.2 percent at 1,042.20 points, after
rising 0.5 percent in the previous session to its highest close
since July 14.
The European benchmark is up more than 61 percent from its
lifetime low of March 9, 2009. But is down more than 6 percent
from a mid-April peak on worries about debt levels in Europe and
the strength of economic recovery.
"The stress tests cannot change anything about the
underlying problems of the tensions within the euro zone, which
may escalate into a credibility crisis," said Tammo Greetfeld,
equity strategist at Unicredit Group. "And they didn't test what
would happen if one or more countries came close to a default."
"We believe the declining momentum of leading indicators
will outweigh positive newsflow on second-quarter earnings," he
added.
GlaxoSmithKline <GSK.L> fell 1.6 percent on reports it is
interested in buying Genzyme <GENZ.O>, which has a market value
of some $17 billion.
Glaxo is said to have a made a "very casual approach" to
Genzyme, asking to be notified if Genzyme considered selling
itself. There have been no further discussions between the
companies.
Sanofi-Aventis <SASY.PA>, also said to be interested in
Genzyme, was flat, with analysts commenting that they saw logic
in such a bid.
Novartis <NOVN.VX>, AstraZeneca <AZN.L> and Roche <ROG.VX>
were down between 1.1 and 1.6 percent.
However, the banking sector was among the gainers. Allied
Irish Banks <ALBK.I>, Bank of Ireland <BKIR.I>, BNP Paribas
<BNPP.PA>, Barclays <BARC.L> and Societe Generale <SOGN.PA> rose
between 1.5 and 3.4 percent.
In an announcement after the close of markets on Friday,
only seven of 91 banks failed stress tests -- five small Spanish
banks, Germany's state-rescued Hypo Real Estate and Greece's
ATEbank <AGBr.AT>. No listed bank failed the tests.
[]
Although some commentators were sceptical of the tests,
saying they were not stringent enough, others said they had
provided valuable information.
"There was significant disclosure in the stress tests, so it
leaves analysts in a position to make up their own mind, " said
Bernard McAlinden, investment strategist at NCB Stockbrokers in
Dublin. "It allows them to distinguish between the vulnerable
and the less vulnerable."
However, Deutsche Bank <DBKGn.DE> fell 1.9 percent after
traders pointed to uncertainty about the company's exposure to
highly indebted euro zone countries following the stress tests.
"Apparently, the market is unhappy that the company gave
little detail about its portfolio and PIIGS (Portugal, Italy,
Ireland, Greece, Spain) bonds," a trader said.
Across Europe, Britain's FTSE 100 <> was flat,
Germany's DAX <> was down 0.1 percent and France's CAC40
<> rose 0.1 percent.
BP RISES
BP <BP.L> rose 1.6 percent after reports it is set to
announce the departure of chief executive Tony Hayward, who came
under fire for his handling of the massive oil spill in the Gulf
of Mexico. The company is set to announce the biggest quarterly
loss in UK corporate history on Tuesday.
Consumer products group Reckitt Benckiser <RB.L> fell 1.4
percent, after its second quarter results, with the stock having
put in a good performance ahead of the numbers following last
week's takeover move for SSL International <SSL.L>.
Tullow Oil <TLW.L>, Europe's largest independent oil
explorer by market value, rose 5.5 percent after saying it made
a further oil find in its deepwater Tano licence off the coast
of Ghana.
(Editing by Mike Nesbit)
