* FTSEurofirst 300 index down 2.2 pct; 3-1/2 mth closing low
* Fears of nuclear crisis in Japan fuels risk aversion
* Luxury goods slip further; renewable energy stocks surge
By Harpreet Bhal
LONDON, March 15 (Reuters) - European shares fell to a 3-1/2
month closing low on Tuesday as investors fled risky assets amid
concerns of a nuclear crisis in Japan, with further pain seen
for sectors such as luxury goods which rely on Japanese demand.
As much as $247 billion was wiped off the value of major
European stock markets in earlier intraday trading, as money
poured into safe-haven government bonds after a Japanese nuclear
power plant exploded and sent low levels of radiation floating
towards Tokyo. []
The pan-European FTSEurofirst 300 <> index of top
shares closed down 2.2 percent at 1,084.70 points, its lowest
closing level since Nov. 30, 2010, after recouping some hefty
losses in late trading.
"There are issues out there that are making the market
nervous. When you look at what is happening at the nuclear
reactor it becomes harder to work out what the implications
could be," said Jane Coffey, a fund manager at Royal London
Asset Management who has 340 million pounds ($548.2 million) of
assets under management.
Despite the broad sell-off she said the crisis represented a
buying opportunity for stocks such as British Gas <CNA.L> which
could benefit from a boost in demand for liquefied natural gas
(LNG) from Japan due to the loss of nuclear production.
Wholesale gas prices rose in Britain, as damage to Japan's
nuclear reactors increased the likelihood for spot LNG being
diverted away from the UK to Japan.
Renewable energy companies gained interest on the back of
concerns about nuclear power, with Nordex <NDXG.DE>, Solarworld
<SWVG.DE> and Q-Cells <QCEG.DE> up 16.7 to 23.3 percent.
"It (the crisis) will definitely have some effect on how
people view nuclear energy in Japan," Coffey said.
PRESSURE ON LUXURY
Luxury goods firms declined for the second straight session
on worries over the impact of demand from major consumer Japan
following the earthquake in the country, with PPR <PRTP.PA>
among the biggest decliners in the sector, down 5.3 percent.
"In terms of impact on European luxury companies, we believe
the impact could be fairly significant given Japan is the
currently the largest luxury market globally," Nomura analysts
wrote in a note, adding that they saw Richemont <CFR.VX> and
Adidas <ADSGn.DE> as most negatively impacted within the sector.
Richemont shed 3.7 percent while Adidas fell 3.1 percent,
against a 2.6 percent drop on the STOXX Europe 600 personal and
household goods index <.SXQP>.
Traders said the market was also looking for an excuse to
take profits in the sector, which have had a good run so far
this year on a bullish outlook for demand from emerging markets.
The fall in equities coincided with a rise in the VDAX-NEW
volatility index <.V1XI>, one of Europe's main barometers of
anxiety, which surged to a near 10-month high.
The higher the volatility index, based on sell- and
buy-options on Frankfurt's top-30 stocks <0#.GDAXI>, the lower
investors' appetite for risky assets such as stocks.
The equity market's steep fall has also taken the index
below its 200-day moving average -- a key technical sell signal
for equities.
Nick Tranter, head of derivatives at Espirito Santo said
investors had been picking up put options on Euro STOXX 50
<> to hedge against the downside risk. Interest had
been centred on the June expiry with the right to sell the index
at 2,100 <STXE21000R1.EX>.
(Editing by Jon Loades-Carter)
