* FTSEurofirst 300 breaks 4-day winning streak, down 0.3 pct
* Banks, miners down on China policy
* Greek banks fall on weak GDP, bond spreads
* Defensives lend support to index
By Dominic Lau
LONDON, Feb 12 (Reuters) - European shares ended a four-day
winning run on Friday after China surprised financial markets by
raising banks' reserve requirements, though demand for defensive
stocks helped limit losses.
The FTSEurofirst 300 <> index of leading European
shares closed 0.3 percent lower to 987.86 points, after trading
as high as 1,002.50 earlier in the session.
China increased the level of reserves commercial banks must
hold for the second time this year to curb lending and inflation
[], weighing on miners and banks.
Banks were among the worst performers, with Barclays
<BARC.L>, BNP Paribas <BNPP.PA>, HSBC <HSBA.L>, Societe Generale
<SOGN.PA>, Lloyds Banking Group <LLOY.L>, Banco Santander
<SAN.MC> and Credit Agricole <CAGR.PA> down 1.1 to 3.2 percent.
Greek bank shares <.FTATBNK> sagged 5 percent after Greece's
economy shrank more than feared last quarter, while a European
Union government source said meetings of the region's finance
ministers next week were unlikely to put together an aid package
for Athens.
Miners were also out of favour as the market was concerned
monetary tightening by China would dampen metal demand.
Rio Tinto <RIO.L>, Anglo American <AAL.L>, Xstrata <XTA.L>,
Vedanta Resources <VED.L>, Kazakhmys <KAZ.L> and Antofagasta
<ANTO.L> dropped 0.3 to 2.5 percent.
"People are nervous because the economic recovery is quite
fragile," said Mark Bon, fund manager at Canada Life in London.
"The cyclicals that you hope will recover strongly may
provide some negative surprises, so you want to take away money
from those if you are feeling more nervous about their
prospects, and defensives last year didn't do very well," he
said, adding that investors sought defensive stocks which lagged
behind last year's rally.
Also weighing on sentiment, Europe's post-recession recovery
hit a snag as German economic growth unexpectedly halted and
Italy went into reverse in the final quarter of 2009, knocking
total euro zone GDP growth almost flat. []
"While we do not expect the euro zone to relapse back into
recession, GDP growth of just 0.1 percent ... highlights the
fact that the region still faces very challenging economic and
financial conditions," said Howard Archer of IHS Global Insight.
Across Europe, the FTSE 100 <> lost 0.4 percent,
Germany's DAX <> dipped 0.1 percent and France's CAC 40
<> eased 0.5 percent.
Meanwhile, U.S. consumer sentiment slipped unexpectedly in
early February but retailers reported stronger sales for
January.
DEFENSIVES OPTED
Investors turned to defensive stocks like food producers,
drugmakers and utilities. Nestle <NESN.VX>, Unilever <ULVR.L>,
Sanofi-Aventis <SASY.PA> and GlaxoSmithKline <GSK.L> were up 0.7
to 1.4 percent.
National Grid <NG.L> advanced 2.6 percent, also aided by
positive comments from Morgan Stanley.
Among individual movers, ThyssenKrupp <TKAG.DE>, Germany's
biggest steelmaker, advanced 2.8 percent as cost cuts, improving
demand and higher prices helped easily beat market expectations
for adjusted pretax profit in the quarter to December.
French tyre maker Michelin <MICP.PA> lost 2.9 percent after
saying it was "extremely vigilant" because of low market
visibility and rising raw material prices at the start of 2010,
as restructuring costs hit its 2009 net profit.
The pan-European index gained 1.6 percent this week,
snapping four weeks of losses.
Still, the benchmark, which rebounded 26 percent in 2009, is
down 5.5 percent this year on concerns over peripheral euro zone
economies and U.S. President Barack Obama's plans on financial
firms.
(Additional reporting by Brian Love, Atul Prakash and Joanne
Frearson; Editing by Jon Loades-Carter)
