* FTSEurofirst 300 down 0.2 pct
* Barclays sags on U.S. fraud lawsuit linked to stock
* StanChart weakens as warns on 2014 profits
By Tricia Wright
LONDON, June 26 European shares came under
pressure on Thursday after a top Federal Reserve official
suggested the U.S. economy would be ready for an interest-rate
hike in early 2015.
The market was also pegged back by weakness in banking
shares, led by a steep drop in Barclays after the New
York Attorney General filed a lawsuit against it.
But it was comments by St. Louis Fed President James
Bullard, who told Fox Business Network that the economy would be
"near normal" in terms of inflation and unemployment before the
end of 2014, that briefly caused a market sell-off.
Bullard reiterated his belief that raising rates by the end
of the first quarter in 2015 will be appropriate, based on his
forecast that U.S. growth will register 3 percent for the next
"I think it is mainly Bullard (that has triggered the market
weakness)," said Andy Ash, director at Monument Securities. "I
think it is (also) the fact that we've been going through some
fairly important (technical) levels."
The pan-European FTSEurofirst 300 fell as much as
0.7 percent after the comments. It recovered some of its poise,
and was trading down 0.2 percent at 1,369.94 points by 1452 GMT,
retreating from a 6-1/2 year high hit last week.
Barclays topped the fallers' list, off 6.8 percent, on
Thursday after the Attorney General filed a securities fraud
lawsuit against the lender on charges of giving an unfair edge
to its U.S. high-frequency trading clients even as it claimed to
be protecting other customers from the traders.
The sharp decline in Barclays' stock on Thursday represented
a wipe-out in market value of more than 2 billion pounds ($3.3
billion). It has lost around 20 percent so far this year, a drop
in market value of about 8.9 billion pounds.
"The judicial context is becoming a real drag for the
European banking sector. There are fears among investors of a
contagion effect from the U.S. investigations. After BNP,
Barclays, who will be next?" said Alexandre Baradez, chief
market analyst at IG France.
France's BNP Paribas is in talks with U.S.
authorities over a potential fine related to alleged violations
of U.S. sanctions against Iran, Sudan and other countries.
Sources told Reuters on Wednesday the bank is likely to be
suspended from converting foreign currencies to dollars on
behalf of clients in some businesses for as long as a year.
Shares of BNP - which have fallen around 20 percent since it
first announced a provision for the fine in mid-February - were
down 1.1 percent on Thursday.
Shares in Standard Chartered fell 4.6 percent. It
warned of lower profits this year after a 20 percent slump in
first-half earnings, as tougher regulations and low market
volatility hit its trading business.
Among brigher spots, London Stock Exchange surged
5.9 percent after the bourse operator unveiled a bid to acquire
investment services firm Frank Russell for $2.7 billion and said
it would launch a rights issue to raise $1.6 billion to help
fund the acquisition.
Danone rose 2.3 percent after Natixis upgraded its
rating on the shares to 'buy' from 'neutral', citing increasing
speculation that the French food group could become a takeover
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Additional reporting by Blaise Robinson and Lionel Laurent;
Editing by Ruth Pitchford)