* FTSEurofirst 300 down 0.6 pct, Euro STOXX 50 down 0.7 pct
* U.S. job numbers heighten tapering expectations
* Standard Chartered falls as it warns on profits
By David Brett
LONDON, Dec 4 European shares fell for a third
consecutive session on Wednesday in response to evidence of
growing momentum in the U.S. economic recovery that could mean a
scaling-back of stimulus by the Federal Reserve.
Standard Chartered was a stand-out faller, dropping
6.5 percent in heavy volume as it warned that profit would
probably drop this year after Asian growth slowed over the past
"Today's below-expectation results will likely lead to
downgrades of over 5 percent to earnings forecasts for 2013 and
potentially 2014," said Jonathan Jackson, head of equities at
Killik & Co. "We prefer HSBC for its more diversified
earnings stream and higher dividend yield."
The results, however, contributed to a 1.3 percent fall in
larger rival HSBC.
Banks were the worst performing sector as the
FTSEurofirst 300 shed 7.26 points, or 0.6 percent to
1,273.59, closing below support around the 1,278 level.
The euro zone blue chip index fell below 3,000
for the first time since October, but it found technical support
to bounce off a session low and close at 2,991.76.
Craig Erlam, analyst at Alpari, is bearish on the technical
outlook for European indexes, although he noted some big support
levels on the Euro STOXX 50 - at 2,977, and 2,955.
The sell-off followed stronger-than-expected employment
figures in the United States - a precursor for non-farm payrolls
data on Friday - suggesting the labour market is robust enough
for the Federal Reserve to start trimming its bond purchases.
"Everyone was long going into December, which is generally a
strong month, so there was some reticence to book gains," said
Chris Parkinson, head of equity strategy at Christopher Street
Capital. "Despite some members of the Fed hinting that maybe
there would be a taper I don't think anyone took it seriously -
maybe today's data has changed that."
Volatility - a crude gauge of investor fear - was
spiking towards levels not seen since October and government
bonds were selling off.
"If you look at the general risk indexes they look to be
moving wider, which generally is an indication that tapering is
back on the table," Parkinson said. He expected the short-term
nervousness to blow-over, however, and still anticipated a
stimulus wind-down to begin in the new year.
But European shares began to pare losses in tandem with a
turnaround on U.S. indexes after figures showed the pace of
growth in the U.S. services sector slowed in November, offering
a contrasting picture to the earlier jobs data.
Robust manufacturing data on Monday had reignited
speculation the Fed could start scaling back its $85 billion of
monthly bond-buying before year-end. That prompted a sharp
sell-off in equities on Tuesday, but traders said markets might
not yet be prepared for an imminent reduction of stimulus.
"My gut feeling is that we will probably get a reasonably
positive set of jobs figures come Friday, and if anything that
might just heighten fears that we could see a December taper,"
said Keith Bowman, an equity analyst at Hargreaves Lansdown.
"We should still get a little bit of downside."