* FTSEurofirst 300 falls 0.8 pct to 1,290.62 points
* Euro STOXX 50 closes down 0.5 pct at 3,014.62 points
* Energy sector hit after BG warns over production
* Vodafone falls as AT&T says no plans to bid for company
* No need to panic - OMGI's Kevin Lilley
By Sudip Kar-Gupta
LONDON, Jan 27 European shares fell to their
lowest level in more than a month on Monday, led by drops in
major telecoms and energy stocks.
The downward move extended last week's decline, which was
triggered by concerns about emerging markets and the pace of
growth in China. Weak corporate earnings in Europe have also
helped to knock European stock markets off multi-year highs.
The pan-European FTSEurofirst 300 index closed down
by 0.8 percent at 1,290.62 points, its lowest level in more than
a month. The euro zone's blue-chip Euro STOXX 50 index
fell 0.5 percent to 3,014.62 points.
Telecoms and energy were the worst-performing European
sectors. The STOXX Europe 600 Oil & Gas Index fell 2.3
percent as BG slumped 13.8 percent after the company
warned production would fall short of forecasts.
The STOXX Europe 600 Telecoms Index fell 1.5
percent, with Vodafone dropping after U.S. telecoms
company AT&T said it was not planning to make an takeover
bid for the UK mobile-service operator.
Traders and investors said European markets may lose more
ground in the coming month. One fund manager expected a further
1 percent fall in the pan-European STOXX 600 index, but
added the longer-term picture remained more robust as Europe's
economic recovery slowly gathers momentum.
"We continue to think the equity market will trend higher,
but there is a higher risk of a short-term setback," said
Goldman Sachs chief global equity strategist Peter Oppenheimer.
"SLOW EUROPEAN RECOVERY"
European stocks suffered their biggest one-day fall in seven
months on Friday, when the FTSEurofirst 300 shed 2.4 percent and
Spain's IBEX dropped 3.6 percent on concern about
economies and currencies in Latin America.
Emerging markets were hit hard last week, with Argentina
knocked by a devaluation in its peso currency while
Ukraine has been rocked by political turmoil.
Kevin Lilley, the head of European equities at Old Mutual
Global Investors, said emerging markets' problems and concern
about weak corporate earnings could push the STOXX 600 index
down another 1 percent to around 319 points. However, Lilley
said the longer-term picture for 2014 in western Europe was more
The Bundesbank said on Monday that growth in Germany -
Europe's largest economy - would accelerate in the first
quarter, and Lilley backed Germany's DAX, which hit
record highs earlier this year, as his favourite European
"I'm not panicking," Lilley said. "The issues with
Argentina and Ukraine seem quite specific to those countries,
but in Europe itself, the economic data is telling us that we're
still in this slow rebound and recovery mode."