* FTSEurofirst 300 sheds 0.5 percent
* Gloomy Deutsche Bank note hurts utilities
* Banks gain on softened Basel III liquidity requirement
By Tricia Wright
LONDON, Jan 7 A leading European share index
fell for the first time in 2013 on Monday, with utilities
leading a broad retreat after a gloomy note on the sector from
After chalking up a more than 3 percent weekly gain and
hitting its highest close in almost two years on Friday fuelled
by a U.S. budget deal and solid jobs report, the FTSEurofirst
300 fell 0.5 percent at 1,161.57 points.
"I don't think it's a great surprise that we see a pause,"
said Andrew Milligan, head of global strategy at Standard Life
Investments, which has around 163 billion pounds ($261 billion)
of assets under management.
"Generally the backdrop is that clients do seem a little
more confident about the world given the economic data that's
appearing, or the absence of the 'fiscal cliff' debacle which
was hanging over the markets in December."
Investors have started to come back to equities after
shunning the asset class for much of the global economic crisis.
According to data from EPFR, global equities enjoyed a sixth
straight week of net inflows in the week ended Jan. 2, driven by
Although Europe equity funds posted outflows for the first
time since the third week of November, Europe funds based in the
United States recorded their 21st straight week of inflows.
Utilities stocks were the standout fallers on
Monday, off 1.6 percent, after Deutsche Bank downgraded several
firms and advised that there are no safe havens in the sector,
Deutsche Bank cut its ratings for RWE, E.ON
and EDF to "sell" from "hold", with shares
in the trio falling 1.7 percent to 3 percent.
"Continental utilities continued to slide in 2012, but we
believe the worst is yet to come for the sector. We see further
downside earnings risk for generators in Central and Northern
Europe," the bank said in a note.
In 2012, Europe's utility index was flat, compared with a 13
percent gain in the benchmark FTSEurofirst 300 index, which
posted its strongest annual increase since 2009.
Banks, by contrast, found favour after the Basel Committee
of banking supervisors said it will give banks four additional
years and more flexibility to build up cash buffers, allowing
lenders to put some of their reserves to work, which should
boost economic growth.
Natixis surged 5 percent, UniCredit
added 1.8 percent and Banco Popular rose 2.1 percent.
"Loosening the noose, as it were - giving them a bit more
breathing space by not imposing such harsh capital requirements,
is something that the banking sector has been crying out for for
ages," Angus Campbell, head of market analysis at Capital
"That's excellent news, not just for the banks, which are a
bit higher today, but for the wider economy as well."