Europe stocks snap 3-session rally; commods gain
* FTSEurofirst 300 snaps 3-day rally, down 0.5 percent
* Mining, energy shares rise along with commodities
* Roche falls after unveiling bid for U.S. Genentech
PARIS, July 21 (Reuters) - European stocks retreated in early trade on Monday, snapping a three-session recovery, but gains in the mining and energy sectors helped cushion the fall.
Among the biggest losers, Swiss drugmaker Roche (ROG.VX) shed 3.3 percent after offering to acquire all outstanding shares in its U.S. partner Genentech Inc DNA.N for $43.7 billion. Genentech's shares traded in Frankfurt were up 10 percent.
British lender HBOS HBOS.L was also on the down side, losing 3.4 percent after saying shareholders subscribed for just 8.3 percent of shares in its 4 billion pound ($8 billion) rights issue, leaving its underwriters to try to sell almost 3.8 billion pounds of stock. At 0827 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.5 percent at 1,158.93 points. The index gained around 3.2 percent last week, rallying after quarterly results from Citigroup (C.N) and Wells Fargo (WFC.N) calmed fears over banks' balance sheets.
"There is, hanging over the market, the idea that the real cyclical companies haven't yet had major profit warnings whereas we know that the economy is slowing down," said Arthur van Slooten, strategist at Societe Generale, in Paris.
"There is still a part of the market that is very likely to at least push its forecast lower," he said.
Mining shares gained ground, rallying along with most base metal prices. Rio Tinto (RIO.L) added 1.4 percent, BHP Billiton (BLT.L) rose 2.7 percent and Xstrata (XTA.L) gained 1 percent.
Energy shares climbed as oil recovered from a recent sharp fall. U.S. crude oil futures CLc1 were up $1.57 at $130.45 a barrel, with oil traders keeping an eye on Tropical storm Dolly, the first storm of the 2008 Atlantic hurricane season that could disrupt oil production in the Gulf of Mexico.
Total (TOTF.PA) gained 2.3 percent, BP (BP.L) added 1.2 percent and Repsol (REP.MC) rose 0.4 percent.
The recent drop in oil prices has helped equities recover over the past few sessions, said van Slooten.
"But it's not a clear sky, and one of the risks is that the drop may prove temporary, notably in view of the hurricane risks."
Tech and media shares fell after disappointing earnings from Google GOOG.L and Microsoft (MSFT.O). Infineon (IFXGn.DE) dropped 0.9 percent, Capgemini (CAPP.PA) fell 1.4 percent, and Publicis (PUBP.PA) shed 1.6 percent. Continued...
