European stocks extend losing streak, UBS falls

                                
 By Blaise Robinson
                                
 PARIS, May 26 (Reuters) - European stocks were slightly down
around midday on Monday, falling for the fourth time in five
sessions as fresh asset writedown fears at UBS <UBSN.VX> knocked
banking shares lower.
                                
 Crude oil prices <CLc1> holding above $130 a barrel also
continued to put pressure on stocks as concerns over rising
inflation persisted.
                                
 Nokia <NOK1V.HE> retreated, down nearly 2 percent on market
talk that the world's largest cellphone maker may cut its
handset prices by as much as 20 percent in a bid to gain a
bigger slice of the market from players like Motorola <MOT.N>.
                                
 Shares in Nokia's Asian rival LG Electronics <066570.KS>
tumbled more than 8 percent on the rumours.
                                
 At 1050 GMT, the FTSEurofirst 300 <.FTEU3> index of top
European shares was down 0.1 percent at 1,320.83 points, after
falling 3.2 percent last week.
                                
 Both UK and U.S. markets were closed on Monday for a public
holiday.
                                
 "The focus remains on oil prices, with concerns arising on
how a number of sectors will cope with that. We've seen a sharp
correction last week on airline stocks after company outlooks,
citing high oil prices, disappointed the market," said Benoit De
Broissia, analyst at Richelieu Finance, in Paris.
                                
 "The pressure from rising commodity prices is now so great
that it reignites fears of second-round inflation, with wage
hikes," he said.
                                
 The rise in oil prices aggravated existing worries among
investors over inflation and stripped more than 2 percent off
Japan's Nikkei <.N225> overnight.
                                
 
                                
 WRITEDOWN FEARS RETURN
                                
 Banks were the heaviest negative weight on the market, with
the DJ Stoxx index of European banks <.SX7P> down 0.7 percent,
led by a decline in shares of UBS <UBSN.VX>, down 3.1 percent
after the Swiss lender said it continues to be exposed to U.S.
mortgages in its prospectus for its upcoming $15-billion rights
issue.
                                
 UBS "continues to hold positions exposed to the United
States residential mortgage and may record additional losses to
such exposures," the bank said.
                                
 UBS will trade ex-rights on Tuesday and some traders said
this was also already weighing on the company's stock.
                                
 UBS is Europe's largest subprime casualty so far, having
written down $37 billion of assets hit by the U.S. subprime
lending crisis.
                                
 Its stock has lost 42 percent so far this year, while the DJ
Stoxx bank index <.SX7P> has fallen 20 percent over the same
period and the broad FTSEurofirst 300 has fallen 12 percent.
                                
 Banco Santander <SAN.MC> was down 1 percent, while UniCredit
<CRDI.MI> fell 1.8 percent and Credit Suisse <CSGN.VX> lost 1.5
percent.
                                
 Around Europe, Frankfurt's DAX <.GDAXI> was up 0.06 percent,
while Paris' CAC 40 <.FCHI> was up 0.3 percent, and the Swiss
blue chip SMI index <.SSMI> was down 0.7 percent.
                                
 French utility Suez <LYOE.PA> was among the top gainers,
rising 2.4 percent after the company said it was looking to sell
its Belgian natural gas trading arm Distrigas <DISTy.BR>. The
company said on Saturday it had entered into exclusive talks
with Italy's Eni <ENI.MI>.
                                
 Eni shares were up 0.3 percent.
 (Editing by David Cowell)