European shares hit as data fuels US stimulus fear

LONDON, July 5 Fri Jul 5, 2013 11:32am EDT

LONDON, July 5 (Reuters) - European shares fell on Friday after a stronger than expected U.S. jobs report saw investors take money out of European stocks in expectation that the U.S. Federal Reserve may soon start to slow its stimulus programme.

Sectors sensitive to changes in economic sentiment led the market lower, with the basic resources sector down 4.1 percent.

The pan-European FTSEurofirst 300 provisionally closed down 1.2 percent at 1,165.44, after non-farm payrolls beat expectations by 30,000 jobs, raising the prospect of an early end to the U.S. central bank's asset-buying programme.

Two weeks ago, Fed Chairman Ben Bernanke said it expected to start cutting back later this year on the $85 billion in bonds it is purchasing each month if data remained encouraging.

The stimulus provided by central banks had fuelled stock markets to multi-year highs as recently as May, although the prospect of its withdrawal in the United States has seen the FTSEurofirst lose 7.5 percent since then.

"I still think good is bad and that view will continue until there is a definitive plan from Ben," Ed Woolfitt, head of trading at Galvan, said, adding that the data supported the argument for slowing the stimulus programme.