* FTSEurofirst 300 index falls 0.9 percent
* Vodafone down 5.8 pct, leads telecoms lower
* BG slips 15.3 pct after warning on production
By Atul Prakash
LONDON, Jan 27 European shares slipped to their
lowest in more than a month on Monday, extending last week's
sharp declines on worries about emerging economies and the pace
of growth in China.
Telecom and energy stocks were hit hard after U.S. mobile
operator AT&T said it was not planning to take over the
British group Vodafone. The STOXX Europe
600 European telecoms index was down 2.4 percent.
Energy shares fell 2.3 percent, led by BG
which warned production this year and next would fall short of
expectations. BG shares fell 15.3 percent, the top faller in
Europe, while Vodafone was down 5.8 percent.
Investors braced for a volatile week when the U.S. Federal
Reserve is expected to pursue its gradual reduction of the
bond-buying stimulus which helped equities last year and pushed
indexes to multi-year highs.
At 1119 GMT, the FTSEurofirst 300 index of top
European stocks was down 0.9 percent at 1,289.20 points after
falling to a low of 1,289.08, the lowest since late December.
"With China growth concerns in the background, further Fed
tapering lurking and emerging market currencies struggling,
naturally investors are worried and taking some profits off the
table after recent strong gains," Tom Robertson, senior trader
at Accendo Markets, said.
"No doubt any sharp pull-back will be met with a surge in
buying as investors hunt for value, but they are trading
cautiously at the moment."
European stocks suffered their biggest one-day fall in seven
months on Friday, with the FTSEurofirst 300 falling 2.4 percent
and Spain's IBEX dropping 3.6 percent on concerns about
economies and currencies in Latin America.
Emerging market currencies from Turkey to Argentina were
dumped last week, making investors nervous that the shakeout in
markets could lead to a full-blown financial crisis,
particularly given the turn in Fed policy.
"There is clear risk-off trade going on at the moment and
it's all to do with stresses in the emerging markets," Daniel
McCormack, strategist at Macquarie said, adding there were
concerns that those emerging market economies which were short
of capital would find it harder to fund themselves, slowing
"With these headwinds in place, the equity market will
generally struggle to push higher."
Banking shares also came under pressure on concerns about
their capital levels, with the STOXX Europe 600 banking index
falling more than 1 percent.
"Sudden fears about emerging markets and also potential
capital shortfalls for some European banks are rattling
investors. People have been a bit complacent lately, so it's
quite logical to get a correction," said David Thebault, head of
quantitative sales trading at Global Equities.
German weekly WirtschaftsWoche reported, citing a new study
by the Organisation for Economic Cooperation and Development
(OECD), that European banks have a combined capital shortfall of
about 84 billion euros ($115 billion).
Among other significant decliners, Germany's Merck
fell 10.3 percent after its finance chief Matthias Zachert
resigned to return to synthetic rubber maker Lanxess.
Today's European research round-up
Asset returns in 2013:
European equities with emerging exposure