European stocks flat, UBS shines

                                
 * FTSEurofirst 300 flat, having dipped below 2008 close
                                
 * Insurers, miners leading decliners
                                
 * UBS top blue-chip gainer on report U.S. may drop tax case
                                
 * Utilities rise on JPMorgan sector upgrade
                                
 
                                
 By Peter Starck
                                
 FRANKFURT, June 23 (Reuters) - European shares were flat on 
Tuesday, having briefly turned negative amid doubts about the
timing of a return to economic growth, which sent stock markets
in the United States and Japan sharply lower.
                                
 UBS <UBSN.VX> shone, rising 3.1 percent after the New York
Times reported the U.S. Justice Department may drop a case aimed
at forcing the Swiss bank to reveal the names of 52,000 wealthy
American clients suspected of tax evasion. [ID:nLN515704]
                                
 At 0855 GMT, the pan-European FTSEurofirst 300 <.FTEU3>
index of top shares was down 0.1 percent at 836.68 points,
having fallen as much as much as 0.7 percent earlier in the
session.
                                
 The European benchmark index ended 2008 at 831.97 points
                                
  U.S. stocks saw their worst one-day loss in two months on
Monday [ID:nN22519149] and Tokyo stocks fell almost 3 percent on
Tuesday. [ID:nT90737]
                                
 "After the massive three-month rally that sent all major
indexes significantly higher, we are now in the middle of the
long-awaited pullback," Close Brothers Seydler said in a note.
                                
 "Market participants start to realise that the recovery in
the economy and earnings is unlikely to be as strong as the rise
in stock prices since early March."
                                
 Despite its recent drop, the European benchmark index is up
around 30 percent from the record low set in early March.
                                
 "The pattern of the equity rally so far fits the traditional
template of a sharp rise and a 'stall' period," Goldman Sachs
said in a research note.
                                
 "Q2 will be a contractionary quarter and the forward
indicators do not suggest positive growth in the (United States,
Europe and Japan) until Q3," Goldman Sachs said.
                                
 Euro zone purchasing managers index (PMI) data on Tuesday
showed that a recovery from the recession stalled in the
services sector in June while manufacturing fared slightly
better. [ID:nLAG003525] [ID:nLM29249]
                                
 Insurers were weak, with AXA <AXAF.PA> down 1.9 percent and
ING Group <ING.AS> falling 1.3 percent.
                                
 
                                
 ANGLO AMERICAN IN SPOTLIGHT
                                
 The DJ Stoxx basic resources index <.SXPP>, which includes
mining companies, was the weakest sectoral performer with a fall
of 1.6 percent.
                                
 Shares in Anglo American <AAL.L> fell 2.3 percent after the
mining group rejected a merger proposal from rival Xstrata
<XTA.L> [ID:nLN318636]. Xstrata shares fell 1.3 percent.
                                
 Anglo American trimmed some early losses after dealers cited
market talk of bid interest from China's state-owned Chinalco.
Both Chinalco representatives in London and officials from Anglo
American declined to comment. [ID:nLN541230]
                                
 Utilities E.ON <EONGn.DE>, up 1.3 percent and Iberdrola
<IBE.MC>, up 1.5 percent, drew strength from a JPMorgan sector
upgrade to "overweight" from "underweight", citing "a likely
pickup in power prices, a potential rebound in economic
activity, improved valuations and a relatively benign network
price regulation".
                                
 The London-listed shares of Thomson Reuters Corp <TRIL.L>
gained 5.4 percent on news that the data publishing and
financial information group, which is also listed in New York,
<TRI.N> plans to withdraw its shares from the London Stock
Exchange. [ID:nN22523423]
                                
 Also among the winners, mobile phone maker Nokia <NOK1V.HE>
advanced 1.7 percent after Credit Suisse raised its target price
for the stock to 14 euros from 12 euros, citing in a note
"increased confidence on margins".
                                
 "We continue to see scope for volume, revenue, margin and
valuation rebound in the second half of 2009," Credit Suisse
said.
                                
 Later in the day, investors will focus on U.S. housing data
at 1400 GMT.
                                
 "Particular emphasis will be paid to existing home sales in
the United States and the (U.S.) house price index," said Heino
Ruland, analyst at Ruland Research.
                                
 Eyes will also be on the U.S. Federal Reserve central bank,
whose Federal Open Market Committee (FOMC) begins its two-day
meeting on interest rate policy.
                                
 "It is almost certain that the Fed will leave the policy
rate unchanged at this week's FOMC meeting; we believe it could
keep rates at extremely low levels right through 2010," ING said
in a note.
                                
 (editing by John Stonestreet)