* FTSEurofirst 300 loses 0.4 pct after hits 17-month high
* Lloyds soars after saying to return to profit in 2010
* Miners, oils drop along with commodities in late session
* For up-to-the-minute market news, click on []
By Blaise Robinson
PARIS, March 19 (Reuters) - European stocks fell on Friday
following a late session sell-off in resource-related sectors,
hit by falling commodities after the dollar gained ground on a
sagging euro.
The FTSEurofirst 300 <> index of top European shares
closed 0.4 percent lower at 1,065.48 points.
The index spent most of the session in positive territory,
hitting a 17-month high in morning trade.
It was initially boosted by a rally in banking stocks such
as UBS <UBSN.VX>, Barclays <BARC.L> and Credit Agricole
<CAGR.PA>, which ended the session up 1.3 to 2.0 percent.
Lloyds Banking Group <LLOY.L>, which said it would return to
profitability in 2010, jumped 8.2 percent.
However, the benchmark index slipped in negative territory
in late trade, tracking losses on Wall Street, as oil and metal
prices took a beating while the dollar rose. Dollar-denominated
oil and metals become more expensive for holders of other
currencies when the dollar rises.
Rio Tinto <RIO.L> slipped 1.6 percent, Anglo American
<AAL.L> fell 2.5 percent, Xstrata <XTA.L> shed 2.3 percent and
Total <TOTF.PA> dropped 0.5 percent.
The recent market rally has been accompanied by thin volumes
and a number of analysts warned the market might be ripe for a
pullback.
"European indices haven't done much since March 8 while U.S.
stocks have been enjoying a steady rally, and looked
overbought," said Alexandre Le Drogoff, technical analyst at
Aurel BGC, in Paris.
"If there's a selloff on Wall Street, there will be a
snowball effect across the Atlantic. Overall, trading volumes
have been thin, and the current configuration is similar to the
one we saw in late 2009 and early 2010 -- a fragile rally, that
was followed by a correction."
STRONG RESISTANCE
Strategists at SEB AG Portfolio Management, part of Swedish
bank SEB <SEBa.ST>, said in a weekly note that many leading
stock market indexes have risen so much that they are now facing
strong resistance levels.
"The air is getting thinner," SEB strategists wrote. But
they say any such setbacks would be limited because fundamental
data speaks in favour of higher share prices in the medium term.
U.S. stocks were down in morning trade on Wall Street on
Friday, led lower by energy shares as oil prices fell more
almost $2 to $80.33 a barrel.
Greece's fiscal problems remained in the spotlight on
Friday. The European Union's monetary affairs chief urged the
bloc's leaders to agree on a standby aid package for Greece next
week, but France and Germany struck different notes on the
issue.
Investors have been worrying that it could prove impossible
to create a euro zone financial safety net for debt-ridden
Greece mostly because of German reluctance, and the doubts
weighed on the euro on Friday. []
Sign of a rise in investors' anxiety, the Chicago Board
Options Exchange Volatility Index <.VIX> surged 4.5 percent on
Friday.
(Additional reporting by Peter Starck in Copenhagen; editing by
Karen Foster)
