* FTSEurofirst down 0.4 percent
* Miners retreat as Japan cuts forecasts
* Kingfisher slides after BofA ML double downgrade
By David Brett
LONDON, Aug 28 Europe's top shares lost ground
on Tuesday as economic growth concerns kept investors subdued
and reluctant to trade while waiting to learn more about further
stimulus from central banks.
By 1012 GMT, the FTSEurofirst was down 4.23 points,
or 0.4 percent, at 1,091.75, erasing the previous session's
gains but keeping within its recent 30 point trading range.
Volumes were very low at just 18 percent of their 90-day
The Eurostoxx 50, the euro zone index of blue
chip companies, was 0.3 percent lower as the index ricocheted
between 2,400 and 2,495.
"Investors are betting on support from central banks. The
markets are not misleading and the central banks will react.
The current pull back we are experiencing is the market pricing
in the step-by-step approach by policymakers," said Victor Peiro
Perez, head of strategy at Caja Madrid Bolsa.
In the short term Perez recommended strengthening positions
in defensive sectors such as utilities but sees banks and miners
regaining momentum in the last quarter as central banks unveil
Growth-focused stocks were the top fallers early on in
Europe with miners the worst-performing sector after
Japan cut its forecast for the economy, citing slowdowns in the
United States and China as well as Europe's debt crisis.
The recent two-month rally has seen sectors such as miners
re-rate to double digit price-to-earnings ratios, well above
March highs, which JP Morgan said might only be sustainable if
policymakers assuage markets and take action in September.
The bank kept its "underweight" rating in cyclical
sub-sectors such as miners, steelmakers and capital saying it
remains concerned over the ability of growth to show any
Spain's economy contracted further in the second quarter of
the year and with no end in sight to the euro zone debt crisis
companies continue to reduce their exposure to the
French bank Credit Agricole rose 0.6 percent as it
said a deal to sell its troubled Greek arm could be wrapped up
within weeks. Costs stemming from the euro zone's most depressed
economy again hammered the French bank's quarterly results.
Kingfisher's exposure to waning growth in France
prompted BofA Merrill Lynch to cut its rating on Europe's
biggest home improvements retailer to "underperform" from "buy",
citing increasing worries over the country's macro outlook.
Kingfisher fell 4.3 percent.
UK-listed retailer Marks & Spencer was 1.9 percent
weaker as recent bid speculation faded.
"(M&A) is a story which crops up from time to time. While
one should 'never say never', we suspect it will come to
nothing," Seymour Pierce said in a note.
Many investors were on the sidelines ahead of meetings that
could pave the way for more economic stimulus.
Friday's global gathering of central bankers in Jackson
Hole, Wyoming, will be closely watched, as will the ECB's policy
meeting on Sept. 6 and a German Constitutional Court ruling on
the euro zone's permanent bailout fund on Sept. 12, which may
offer direction on the ECB's bond-buying plans.
"It is so quiet," a London-based trader said. "No one wants
to take on any risk in case policymaker surprise and they get
caught on the wrong side of a big market move."