Growth worries hit European shares, cyclicals slip
* FTSEurofirst 300 finishes 0.5 percent lower
* Weak global macroeconomic numbers hurt sentiment
* Cyclical shares lose ground, defensives up
By Atul Prakash
LONDON, June 21 (Reuters) - European shares ended lower in choppy trading on Thursday as weak data from China, Europe and the United States raised fresh concerns about a global slowdown, although expectations of more central bank action to stimulate growth helped limit losses.
Shares seen as cyclicals, which generally suffer during difficult economic conditions, lost ground. The STOXX Europe 600 basic resources index fell 3 percent, autos dropped 1.9 percent and tech shares fell 1 percent.
The FTSEurofirst 300 index of top European shares finished 0.5 percent lower at 1,008.90 points, after rising in the previous four straight sessions, as global factory data and U.S. jobless claims all pointed to sluggish economic growth.
"Investors are concerned that the European debt crisis is having a broader ripple effect and today's macroeconomic figures reinforce that view. Some disappointing corporate updates have also hurt sentiment," Keith Bowman, equity analyst at Hargreaves Lansdown, said.
"But disappointing economic numbers are counterbalanced by hopes of further central bank actions. The U.S. Federal Reserve pretty much did overnight what a lot of people had expected, there are very high hopes that the Bank of England will relaunch its quantitative easing programme in early July and the European Central Bank may cut interest rates."
The Fed on Wednesday delivered another round of monetary stimulus and said it was ready to do even more to help an increasingly fragile economic recovery, but investors became nervous after global economic numbers painted a gloomy picture.
The Philadelphia Federal Reserve showed factory activity in the mid-Atlantic region contracted for a second month in June, the euro zone's private sector contracted at its fastest pace since June 2009, U.S manufacturing grew in June at its slowest pace in 11 months and China's factory sector shrank for an eighth straight month in June.
Analysts said Chinese authorities had enough monetary and fiscal ammunition to tackle a slowdown in its growth and will be prompted to act to support economic activities in the country, the world's second biggest economy.
"Our call on China is that you will get a re-acceleration in growth in the second half of this year," Robert Parkes, equity strategist at HSBC Securities said, adding that debt problems in Europe and deteriorating global economic outlook will force authorities to take some bold steps to address the situation.
"History tells us that it's dangerous to be too bearish during times such as this because you do tend to get some form of policy response in Europe when peripheral yields spiked higher," he said, advising some sector plays.
Parkes said the energy sector was attractive in the current environment as oil prices were not likely to collapse, the sector was cheap and offered a lot of value. He also liked banks as they were showed resilience in a difficult macro backdrop.
Banks, which fell 0.6 percent, could get support on Friday as two independent audits of the Spanish banking sector showed after market close Spain's banks would need 51-62 billion euros ($64-78 billion) in extra capital to weather a serious downturn of the economy and new losses on their books.
The figure is lower than the 100 billion euro bailout fund Spain received to address its banking crisis.
But some investors preferred to remain defensive and looked for companies that paid progressive dividends and had the ability to grow their business organically.
"Our tactical strategy is still very much defensive. We continue to have a broad preference for companies with exposure to international markets. Although we recognise that Asia is slowing, it is still growing quite strongly," Jeremy Batstone-Carr, head of private client research at Charles Stanley, said.
Defensive shares gained ground, with the healthcare sector rising 0.6 percent and food and beverages shares up 0.1 percent.
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