* FTSEurofirst closes 0.45 percent down
* Commodity shares slip, tracking weaker crude, metals
* Commerzbank sheds 10 pct after announcing Dresdner deal
By Atul Prakash
LONDON, Sept 1 (Reuters) - European shares ended lower on
Monday as weaker crude and metals prices hit commodity stocks
and Commerzbank's <CBKG.DE> $14.5 billion deal to buy Allianz's
<ALVG.DE> Dresdner Bank unit dragged down banking shares.
The FTSEurofirst 300 index of top European shares <>
closed down 0.45 percent at 1,189.35 points, slipping on the
first day of the month after gaining 1.2 percent in August, only
its second positive month in the previous 10.
The pan-European index is down 21 percent this year, hit by
big losses at banks due to the credit crisis and slowing global
economic growth.
Miners were the top weighted sectoral loser on the index,
tracking a sharp decline in metal prices. Copper fell 2.6
percent under pressure from gains in the dollar, rising stocks
and worries about demand. Other base metals also slipped.
BHP Billiton <BLT.L>, Anglo American <AAL.L>, Vedanta
Resources <VED.L>, Lonmin <LMI.L>, Kazakhmys <KAZ.L>, Xstrata
<XTA.L>, Antofagasta <ANTO.L> and Rio Tinto <RIO.L> fell between
1.4 and 5.8 percent.
Energy shares also dropped because of a 3.4 percent fall in
crude oil prices after concerns that Hurricane Gustav would
cause severe damage to the U.S. oil sector eased as the storm
failed to pick up strength.
BP <BP.L>, Royal Dutch Shell <RDSa.L>, gas producer BG Group
<BG.L>, Cairn Energy <CNE.L> and Tullow Oil <TLW.L> shed between
1.5 and 4.4 percent.
The weaker crude price put pressure on energy stocks, but
was seen positive for companies and broader markets as it
lowered inflation concerns. European shares pared losses in the
afternoon session with a decline in crude prices.
"Whilst some traders feel that Europe has outperformed other
global equity markets and a sell-off is therefore possible, the
$6 reversal in the price of oil has encouraged some follow
through buying," said Paul Chesterton, senior trader at CMC
Markets.
Across Europe, Britain's FTSE <> was down 0.6 percent,
Germany's DAX <> fell 0.01 percent and France's CAC
<> was down 0.2 percent.
U.S. markets are closed for the Labor Day holiday.
BANKS UNDER PRESSURE
Banks remained in negative territory as investors said
Commerzbank's acquisition of Dresdner was overpriced.
Commerzbank shares slid 10 percent, while Allianz <ALVG.DE>
closed nearly flat.
Commerzbank <CBKG.DE> has agreed to buy Dresdner Bank from
Allianz <ALVG.DE> in a $14.5 billion all-German deal that will
break the country's banking mould and cost 9,000 jobs.
Other banks also weakened, with UBS <UBSN.VX> losing 1
percent, Deutsche Bank <DBKGn.DE> dropping 0.2 percent and
Postbank <DPBGn.DE> falling 0.7 percent.
Global economic and financial uncertainty also weighed on
the sector, with investors trading cautiously.
"We still see a number of headwinds posed by the overall
macroeconomic outlook in Europe," said Jonathan Lawlor, head of
European research firm Fox-Pitt, Kelton.
"And that still leaves a lot of uncertainties on how the
slowdown will feed back into the operating profitability of the
financial segment."
A poor economic outlook persists, with European factory
activity shrinking in August. The euro zone recorded its third
straight month of contraction despite input cost relief from the
sharp retreat in oil prices.
Britain's economic downturn was likely to be deeper and
longer than expected and could be the worst for 60 years,
finance minister Alistair Darling said on Saturday.
Among individual stocks, GDF Suez <GSZ.PA>, Europe's
largest and newly created utility, rose 1.5 percent after
posting 20 percent higher first-half profits.
French tyremaker Michelin <MICP.PA> was a standout gainer,
rising 5.4 percent as traders cited a Merrill Lynch upgrade.
(Additional reporting by Joanne Frearson; editing by Rory
Channing)
