By Eva Kuehnen
FRANKFURT, May 20 (Reuters) - European shares snapped a
four-day rally on Tuesday, pulled down by mining and banking
stocks, which offset gains in the pharmaceutical sector.
By 0906 GMT, the pan-European FTSEurofirst 300 index
<> was down 0.96 percent at 1,365.10 points. The index
rose about 2.5 percent over the past four sessions, mainly
helped by commodity stocks.
The pan-European index is up about 3 percent since the
beginning of the month, but still down 8.5 percent so far this
year.
The market offered little reaction to data that showed
German investors' view of current economic conditions was better
than anticipated in May, although expectations deteriorated more
than forecast, according to the ZEW Institute.
The DJ Stoxx banking index <.SX7P>, one of the worst
performing sectors in Europe so far this year, has lost about 16
percent year to date. The DJ Stoxx basic resource index <.SXPP>
has gained about 20 percent.
Mining stocks fell on Tuesday, with Rio Tinto <RIO.L> down
4.5 percent, BHP Billiton <BHP.L> down 5.6 percent, and Xstrata
<XTA.L> falling 4.1 percent.
Ingo Frommen, head of international equities at German bank
LBBW, said investors were locking in profits after the sector's
recent strong run.
Banking shares fell, led by declines in Royal Bank of
Scotland <RBS.L> as the glum mood surrounding the stock and the
UK bank sector persisted.
"What you can see in the banking sector is the wheat
separating from the chaff. On the one hand, banks which
announced plans for rights issues weaken, while others, who
performed well in the first quarter, are stronger," said
Frommen.
RBS fell 1.5 percent, Credit Agricole <CAGR.PA> fell 1.6
percent, UBS <UBSN.VX> dipped 0.6 percent.
Barclays <BARC.L> fell 1.5 percent after a media report said
the bank was considering a takeover bid for a rival and could
try to buy an investment bank unit. Barclays was not immediately
available to comment.
PHARMA BUCKS THE TREND
On the upside, pharmaceutical stocks bucked the trend, and
the DJ Stoxx pharmaceutical sector index <.SXDP>, which is down
10.8 percent since the beginning of the year, was up 1.5 percent
on Tuesday, lifted by gains in AstraZeneca <AZN.L>.
The stock climbed after news a U.S. court hearing over
patents on its blockbuster schizophrenia drug Seroquel has been
brought forward to Tuesday from June 4, boosting hopes the
Anglo-Swedish group may prevail in the case.
Vague talk of bid interest from Pfizer Inc <PFE.N> or
Schering-Plough Corp <SGP.N> also lent some support to
AstraZeneca shares, which rose 3 percent.
GlaxoSmithKline <GSK.L> rose 2 percent.
Investors worked their way through a series of earnings
updates, including Britain's second-largest property company
British Land <BLND.L>.
British Land shares rose 2 percent after its said sentiment
in the property market remained volatile but the rate of decline
in property values was slowing.
Oil stayed above $127 a barrel <CLc1>, keeping concern about
inflationary pressures on the boil, particularly after data
showed surging energy prices boosted German producer price
inflation to a 20-month high in April, Federal Statistic Office
data showed on Tuesday.
(editing by Elizabeth Fullerton)
