* FTSEurofirst 300 down 0.1 pct, Euro STOXX 50 down 0.2 pct
* German industrial data confounds steady expectations
* Total, Sanofi fall after cautioning over results
* M&A provides support to market
By Alistair Smout
EDINBURGH, July 7 European shares fell on Monday
after weak data out of Germany took the wind out of a rally that
saw a top index post its best week in over three months.
German industrial output fell 1.8 percent on the month in
May, its biggest drop in more than 2 years, confounding
expectations of unchanged industrial output in Europe's
"It's just more evidence that overall economic growth has
slowed down in the second quarter from the strong first
quarter," Ioan Smith, director at KCG, said.
The pan-European FTSEurofirst 300 rose 1.7 percent
last week, its biggest rise in more than three months, boosted
by robust growth in U.S. employment and further signs of support
from the European Central Bank.
The gains saw the index rebound towards 6-1/2 year highs and
retrace the losses suffered in the previous week, when it had
snapped a 10-week winning streak.
However, appetite for European equities has been hindered by
the relative weakness of the region's economy, in contrast to
the United States, where stocks are at record highs.
Despite the weak data, the German DAX managed to
outperform the likes of France's CAC, the Italian FTSE
MIB and Spain's IBEX, which all fell 0.2
The DAX, which is a total returns index and includes
dividends, is up 4.8 percent so far this year, compared to gains
on the IBEX and FTSE MIB of over 11 percent.
"It rings alarm bells across Europe that the recovery is not
a straight line upwards," James Butterfill, global equity
strategist at Coutts, said.
"It's understandable that you would see other, more
peripheral, European markets underperform on a data point like
this, because in Germany, a lot of the bad news is already
The pan-European FTSEurofirst 300 was down 0.1
percent to 1,392.88, while the euro zone blue chip Euro STOXX 50
fell 0.2 percent.
Hindering the CAC, French pharmaceutical heavyweight Sanofi
fell 0.5 percent warned that currency effects would
impact earnings, shaving over 2 points off the index.
Oil firm Total also weighed, dropping 0.6 percent after it
said a weak refining performance in the second quarter would
Mergers and acquisition activity supported the market, with
Mediaset up 2.1 percent after it agreed to sell an 11
percent stake in its pay-TV division to Telefonica.
Scandinavian telecoms received a boost after Sweden's Tele2
sold its Norwegian mobile telecoms operation to rival
TeliaSonera for 5.1 billion Swedish crowns ($744
Tele2 rose 2.9 percent and TeliaSonera gained 2 percent,
while Norwegian peer Telenor was up 2.6 percent.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Editing by Andrew Heavens)