* FTSEurofirst 300 down 0.6 percent
* Banks firm, energy stocks hit by lower oil price
* Eyes on U.S. bailout plan, payrolls data
By Peter Starck
FRANKFURT, Oct 3 (Reuters) - European stocks fell on Friday
as an advance for banks, notably Swiss firm UBS <UBSN.VX>, was
offset by energy stocks which were hit by a fall in crude oil
prices.
At 0912 GMT, the FTSEurofirst 300 <> index of top
European shares was down 0.6 percent at 1,051.13 points. It fell
1.4 percent on Thursday.
Investors awaited a debate and vote in the U.S. House of
Representatives on the $700 billion financial industry bailout
package.
"In the short term the U.S. rescue package is the dominant
factor for stock markets worldwide and financials will remain in
focus," said LBBW analyst Michael Koehler.
Economic growth was slowing down, partly as a result of the
financial market turbulence, he said, echoing a theme addressed
by several analysts in the run-up to the release at 1230 GMT of
September U.S. jobs data, which are among the most closely
watched monthly indicators on the health of the world's largest
economy.
Morgan Stanley slashed its euro zone gross domestic product
growth forecast for 2009 to 0.2 percent from 1 percent.
"The demand component hardest hit will be investment
spending," Morgan Stanley said in a note.
"Investment in machinery and equipment, as well as
construction investment, will likely suffer from a combination
of tighter financing conditions, greater uncertainty about the
cyclical outlook, and cooling housing markets," the U.S. bank
said.
Shares in Swiss engineering group ABB <ABBN.VX> fell 3.6
percent.
Germany's Commerzbank said the financial crisis and the
faltering economy in Europe would have "a more visible impact in
the forthcoming reporting season and all sectors are likely to
be affected."
The third-quarter corporate earnings reporting season kicks
off in earnest with U.S. aluminium maker Alcoa <AA.N> on Oct. 7.
Crude oil prices fell for the third straight day, towards
$93.50 a barrel, on worries the U.S. bailout package may not be
enough to prevent a further drop in oil demand.
Oil and gas <.SXEP> was the biggest drag on the FTSEurofirst
300 index, with Italy's ENI <ENI.MI> down 2.4 percent, France's
Total <TOTF.PA> falling 1.8 percent and Royal Dutch Shell
<RDSa.L> 1.5 percent lower.
The price of copper fell to a 20-month low. Shares in Anglo
American <AAL.L> fell 1.7 percent.
Credit Suisse cut mining to "market weight" from
"overweight", saying commodity prices tend to fall when global
industrial production growth drops below 2 percent.
"We now believe global industrial production will decelerate
to zero from 3.6 percent year-on-year currently," Credit Suisse
said in a global equity strategy note.
Among banks, the day's top weighted gainers, French BNP
Paribas <BNPP.PA> traded 3.5 percent higher after Goldman Sachs
raised its target price for the stock.
Britain's Barclays <BARC.L> was up 3.3 percent, France-based
Societe Generale <SOGN.PA> gained 2.9 percent and UBS added 1.7
percent. UBS said it would cut 2,000 jobs and close most of its
commodities business.
The U.S. financial industry bailout plan is due to go before
the House of Representatives later on Friday.
"Swift approval could boost sentiment in the short term and
trigger a technical (stock market) recovery," LandesBank Berlin
(LBB) said in a note.
"But we do not expect that to build a sustained floor or
turn the trend," LBB said.
(Reporting by Peter Starck; editing by Simon Jessop)
