European shares consolidate after two-day rally
* FTSEurofirst 300 flat
* Chemicals drop on bearish JPMorgan note
* Defensive healthcare sector firms
By Tricia Wright
LONDON, June 27 (Reuters) - European shares held steady on Thursday following two days of sharp gains, as a sell-off in chemicals stocks after a bearish note on the sector from JPMorgan offset strength from defensive stocks.
The FTSEurofirst 300 was trading flat at 1,149.24, having rallied 3.2 percent over the previous two sessions.
European equities suffered a sharp sell-off late last week after comments from Federal Reserve Chairman Ben Bernanke about scaling back the central bank's bond-buying programme.
But Fed policy makers have since played down any imminent end to the bond-buying quantitative easing programme, offering investors reassurance that policy will only be shifted once the economy is strong enough.
"I think longer-term markets should rejoice in the fact that quantitative easing will come to an end, that the Federal Reserve believes the U.S. economy is recovering to the point where it can now start to taper that stimulus," said Barclays strategist Henk Potts.
Helping to keep markets steady, Chinese money market rates moderated for a fifth day after last week's spike, with Asian stocks recovering some of their recent hefty losses as fears of a credit squeeze subsided.
Chemicals stocks were among the top fallers on Thursday with a 0.7 percent drop after JPMorgan cut its recommendations on a number of firms in the sector, while defensive healthcare stocks advanced 0.3 percent.
Lanxess fell 5.2 percent, Solvay dropped 3.9 percent and BASF shed 2.6 percent after JPMorgan cut its ratings on the trio to "underweight" from "neutral", with materially reduced forecasts for 2014-2016.
"We believe that current margins are not sustainable as we see potential major headwinds: 1) new capacity in Asia and Europe 2) limited potential for further cost savings and 3) significant cost advantages going forward for U.S. chemicals peers due to cheaper feedstock from shale gas," JPMorgan said.