* FTSEurofirst 300 index falls after 9 days of gains
* Banks, commodities among top decliners; UK budget eyed
* Euphoria over China currency move disappears
* For up-to-the-minute market news, click on []
By Atul Prakash
LONDON, June 22 (Reuters) - European shares drifted lower on
Tuesday after strong gains over the past nine sessions, with
euphoria over China's currency move dissipated and with equity
investors taking profits from seven-week highs.
At 0805 GMT, the FTSEurofirst 300 <> index of top
European shares was down 0.4 percent at 1,051.68 points after
hitting its highest closing since early May on Monday following
an announcement by China's central bank over the weekend that it
would allow more flexibility for the currency.
"It was good for one day, but now we are back to business.
The market is going to focus again on macro-economic numbers,"
said Koen De Leus, economist at KBC Securities.
"People gave much more weight to the currency move than it
deserved. Of course trade fictions have been avoided for the
moment, but there are still some people in the U.S. who are not
very pleased with China."
Big Chinese state-owned banks kept the yuan in check, a day
after its biggest rise since the currency was revalued in 2005,
indicating Beijing will allow its currency to appreciate at a
far slower pace than demanded by its critics in the West.
Financial stocks were among the top losers, with STOXX
Europe 600 banking index <.SX7P> falling 0.8 percent. Barclays
<BARC.L>, BNP Paribas <BNPP.PA> and Societe Generale <SOGN.PA>
fell 2 to 3.7 percent.
Commodity stocks, which spiked in the previous session on
expectations that demand for industrial metals and oils will
rise in China following the currency move, lost ground.
Miners BHP Billiton <BLT.L>, Antofagasta <ANTO.L> and ENRC
<ENRC.L> fell 1.5 to 2.5 percent, while oil companies BP <BP.L>,
BG Group <BG.L> and StatoilHydro <STL.OL> shed 0.7 to 2.1
percent.
BRITISH BUDGET EYED
Investors were also cautious ahead of Britain's budget later
in the day. Finance Minister George Osborne was expected to
announce big spending cuts and tax rises in what will be the
tightest budget in a generation and the first big test for the
new coalition government. []
Many economists are concerned that tightening policy too
fast right now could plunge Britain back into recession. U.S.
President Barack Obama called on his fellow G20 leaders last
week not to repeat the mistakes of the 1930s.
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For a graphic on British economy, click here:
http://r.reuters.com/zud73k
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Charts suggested the FTSEurofirst 300 index could struggle
around 1,048 points, its 61.8 percent Fibonacci retracement of
the fall from mid-April to late May. Last week, the index rose
to hover above its 200-day moving average, now at 1,027 points,
but a fall below the average could trigger more sell-off.
Among individual companies, British Airways <BAY.L> said it
had agreed a recovery plan for its 3.7 billion pound ($5.5
billion) pension deficit, potentially removing a final obstacle
to its planned merger with Spain's Iberia <IBLA.MC>. British
Airways was up 0.3 percent, while Iberia gained 0.4 percent.
Across Europe, the FTSE 100 <>, Germany's DAX <>
and France's CAC 40 <> fell 0.1 to 0.5 percent. The Thomson
Reuters Peripheral Eurozone Countries Index <.TRXFLDPIPU> fell
0.3 percent.
(Editing by Hans Peters)
