* FTSEurofirst 300 drops 1.4 pct, down 0.5 pct on the week
* Miners retreat along with metal prices
* Automakers drop on BMW's warning, GM's big loss
By Blaise Robinson
PARIS, Aug 1 (Reuters) - European stocks fell on Friday,
knocked lower by a sharp drop in mining shares that followed
metal prices, while automakers retreated after a profit warning
from BMW <BMWG.DE> and GM's <GM.N> massive loss.
Irish drugmaker Elan <ELN.I> plummeted 46 percent as a
second product setback in a week shattered confidence in its
line-up of biotech medicines.
Investors were also rattled by poor U.S. data that showed
the unemployment rate hit its highest level in four years during
July as employers cut non-farm jobs for a seventh straight
month, though less severely than predicted.
The jobless rate climbed to 5.7 percent from 5.5 percent in
June as 51,000 jobs were eliminated in July, bringing losses for
the year to 463,000. Analysts polled by Reuters had expected
75,000 jobs would be cut last month but had forecast the
unemployment rate would rise only to 5.6 percent.
The FTSEurofirst 300 <> index of top European shares
closed 1.4 percent lower at 1,163.73 points. It ended the week
with a loss of 0.5 percent.
"The data is in line with what we saw in the previous
months...the job losses are slightly lower than what we saw
earlier this year, but the unemployment rate is getting worse,"
said Jean-Marc Lucas, economist at BNP Paribas, in Paris.
"It confirms that the job market is deteriorating, and there
is no reason to believe that the trend will change over the next
few months, even over the next few quarters."
Adding to jitters on Friday, oil prices rose sharply,
rekindling inflation fears and concerns over corporate costs.
U.S. crude oil futures <CLc1> rebounded above $128 a barrel
in volatile trading, led by a surge in U.S. gasoline futures
which offset early worries about sluggish economic growth in the
world's top energy consumer.
Car markers took a beating, with BMW sinking 5.4 percent
after warning it would miss its 2008 targets and posting a 44
percent drop in quarterly pretax earnings. The sector also got
hit after General Motors said it lost another $15.5 billion and
Nissan <7201.T> posted earnings that widely missed expectations.
Renault <RENA.PA>, which has a significant stake in Nissan,
fell 3.6 percent, Daimler <DAIGn.DE> lost 1.9 percent, and
Volkswagen <VOWG.DE> fell 4.1 percent.
The DJ Stoxx auto sector <.SXAP> has tumbled 31 percent so
far in 2008, while the FTSEurofirst 300 is down 23 percent
year-to-date.
But the biggest negative weights on the FTSEurofirst 300
index were in the mining sector, surrendering some of the lofty
gains made over the past few sessions. Rio Tinto <RIO.L> lost
5.5 percent, Anglo American <AAL.L> fell 5 percent and Xstrata
<XTA.L> dropped 5.5 percent.
British Energy <BGY.L> dropped 4 percent after the group's
investors rejected a 12 billion pound ($24 billion) takeover bid
by EDF <EDF.PA>, derailing the French group's expansion plans.
EDF, which lost 3 percent, said it had failed to reach an
agreement to buy British Energy.
Norwegian energy group StatoilHydro <STL.OL> lost 6.7
percent after its underlying second-quarter profit missed
forecasts, while French cement maker Lafarge <LAFP.PA> lost 7.9
percent after it missed the consensus of analysts' forecasts
with its first-half operating profit.
Among the few stocks on the upside, Belgian drugmaker UCB
<UCB.BR> rose 5.6 percent after beating forecasts and announcing
a new initiative to improve profitability.
Ahold <AHLN.AS> gained 5.8 percent after the Dutch
supermarket group beat analysts' forecasts with its
second-quarter sales.
(Editing by Elaine Hardcastle)
