Retailers lead European shares lower as taper worries weigh
* FTSEurofirst 300 down 0.2 pct, Euro STOXX 50 down 0.1 pct
* Metro tops falling stocks as MS downgrades
* Tesco falls on broker downgrades and retailers suffer
* Tapering fears on stronger economic data pressure markets
* BoE, ECB announcements due from 1200 GMT
By David Brett
LONDON, Dec 5 (Reuters) - European shares extended losses early on Thursday as investors continued to trim positions in light of stronger economic data that has heightened worries over the potential for an early winding down of equity-friendly stimulus.
Leading falling stocks was German retailer Metro, which shed 3.4 percent, a decline traders attributed to a Morgan Stanley downgrade to "equal-weight" from "overweight".
"We lower Metro to Equal-weight given the share price breached our price target (36 euros) this week and we struggle to identify any near-term catalysts," it said in a note.
Retailers was the worst performing sector in Europe in early deals, also hampered by a 1.4 percent fall in UK heavyweight Tesco, which extended recent declines as brokers and investment banks began to downgrade ratings and forecasts after Wednesday's downbeat update.
By 0831 GMT, the FTSEurofirst 300 was down 2.3 points, or 0.2 percent, at 1271.29 points, testing support around the 1,278 level and heading lower for its fourth straight session.
The euro zone blue chip index remained below 3,000 - a level it hadn't reached since October - at 2,987.73 and tested support around 2,977, and 2,955.
The FTSEurofirst is currently trading near six-week lows as investors have become spooked by strong economic data, particularly in the United States, that has shortened, albeit still long odds, of an early wind-down of the stimulus which had helped propel the index to five-year highs at the end of November.
"Markets have fallen quite a bit in recent sessions on concerns that U.S. economic data has been coming in stronger than expected, prompting talk of bring forward tapering," said Jawaid Afsar, sales trader at SecurEquity.
"On top of that we have non-farm pay numbers tomorrow and the Fed meeting next week. Still quite a few headwinds."
Investors will keep a close eye on U.S. jobless benefits data for the week ended Nov. 30, and U.S. preliminary (second) GDP forecasts for the third quarter, both due out at 1330 GMT.
A further improvement in the labour market could prompt the U.S. central bank to trim its stimulus sooner than expected, a negative scenario, at least in the short-term, for equities.
"It should not be a surprise to investors that tapering is coming. The fact that the U.S. government is trying to do it sooner suggests that the stimulus program has had the desired effect," said Joe Neighbour, trading analyst at Central Market.
"I think we will see the markets move sideways to lower up until the 18th December and some positive rhetoric from the Fed may give the markets a final push higher into year end."
The Bank of England and the European Central Bank are likely to hold off any fresh policy action later in the day, the ECB's new economic forecasts will be in focus for signs of prolonged price weakness that could lead it to act again next year.
- Exclusive: Radar data suggests missing Malaysia plane deliberately flown way off course - sources
- Investigators focus on foul play behind missing Malaysia plane: sources |
- Kremlin website hit by 'powerful' cyber attack
- West prepares sanctions as Russia presses on with Crimea takeover |
- UPDATE 1-Rolls-Royce concurs with Malaysia on missing jet's engine data