Falling miners drag Europe stocks to one-week low
* FTSEurofirst 300 down 0.4 pct; extends Thursday's selloff
* Miners pace the decline, falling along with metals
* Index on track to record third straight week of losses
* For up-to-the-minute market news, click on [STXNEWS/EU]
PARIS, July 3 (Reuters) - European shares dropped 0.4 percent in early trade on Friday, adding to the previous session's selloff triggered by downbeat U.S. jobs data, as mining shares fell along with metal prices.
French utility EDF (EDF.PA) was Europe's biggest loser, down 4.3 percent after Morgan Stanley downgraded its rating on the stock to "equal weight" from "overweight", while both UBS and Citigroup trimmed their price target on the stock.
At 0830 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.4 percent at 839.95 points. The index tumbled 2.6 percent on Thursday after data showed U.S. employers shed nearly half a million jobs in June and the unemployment rate surged to 9.5 percent, the highest in nearly 26 years.
"Payrolls were a wake-up call," said Jacques Henry, analyst at Louis Capital Markets, in Paris.
"The data showed that the economic recovery remains fragile and more downbeat data is to be expected, particularly on the jobs front. Stocks are ripe for a consolidation period."
Rio Tinto (RIO.L) was down 2 percent, BHP Billiton (BLT.L) down 1.6 percent and Xstrata (XTA.L) fell 1.1 percent.
France Telecom (FTE.PA) lost 1 percent after UBS downgraded its recommendation on the stock to "sell" from "neutral".
"Short term valuation could offer support, but competition leaves shares expensive in the medium term and with higher risks in our view," UBS analysts wrote in a note.
Banking shares were mixed, with HSBC (HSBA.L) up 1.1 percent, Deutsche Bank (DBKGn.DE) up 1 percent and Commerzbank (CBKG.DE) up 3.7 percent, while Credit Suisse (CSGN.VX) was down 1.1 percent and Societe Generale (SOGN.PA) shed 1 percent.
Pharma stocks, seen as defensive plays, were on the upside, with Roche (ROG.VX) up 0.5 percent, Sanofi Aventis (SASY.PA) up 1.2 percent and AstraZeneca (AZN.L) up 0.6 percent.
Dutch navigation device maker TomTom (TOM2.AS) gained 4.8 percent after the stock started to trade ex-rights, creating demand from arbitrage traders and investors that have regained confidence to buy the stock, analysts say.
Around Europe, UK's FTSE 100 index .FTSE was down 0.2 percent, Germany's DAX index .GDAXI down 0.3 percent, and France's CAC 40 .FCHI down 0.6 percent.
On the macro front on Friday, investors were digesting mixed data on the euro zone service sector. Key surveys showed that signs of a recovery in the euro zone's dominant service sector took a backwards step in June but business optimism hit a near two-year high on hopes the worst is over.
BACK TO DEFENSIVES?
Markit revised up its Eurozone Services Purchasing Managers Index in June to 44.7 from the flash estimate of 44.5, but this was down from May's 7-month high of 44.8.
The FTSEurofirst 300, which was on track to record its third consecutive weekly negative performance, has gained 30 percent since reaching a record low in early March as banking and cyclicals stocks sharply rose on hopes of a speedy economic recovery.
But the market's rally during the spring has stalled since early May, and a number of analysts are now saying investors should turn again to defensive stocks.
"Defensives outperform falling markets," Citigroup analysts wrote in a note. "Defensive growth can outperform rising markets. If recovery is mild, conditions could be good for latter."
U.S. markets will be closed on Friday for a holiday. (Additional reporting by Gilbert Kreijger in Amsterdam; Editing by Hans Peters)
