* Stocks fall on German bank fines
* ECB Lautenschlaeger says QE last resort
* Market looks to Fed minutes, earnings season
By John Geddie
LONDON, July 8 Europe's main stock indices and
bond benchmarks dipped on Tuesday amid reports of new U.S. fines
on banks and dimming prospects for an asset purchase programme
from the European Central Bank.
Bank shares weighed on European equity indexes, compounding
losses after a two-session drop, as Germany's largest lenders
were said to be negotiating a settlement with U.S. authorities
over their dealings with countries blacklisted by Washington
following a huge fine for French lender BNP Paribas.
At 0740GMT, the pan-European FTSEurofirst 300 index .FTEU3
was down 0.1 percent at 1,380.33. Germany's Dax was
down 0.3 percent, France's CAC was down 0.1 percent and
the UK's FTSE 100 was down 0.1 percent.
Shares in German lender Commerzbank fell 3.5
percent as the New York Times reported it could pay at least
$500 million in penalties. Its larger competitor Deutsche Bank
saw its shares slip down 0.5 percent.
"I think Commerzbank's stock will suffer a bit but unless
they get a very big fine like BNP, I don't think it will suffer
like the other banks (hit by U.S. investigations)," said Mike
Reuter, a broker at Tradition.
ECB Executive Board member Sabine Lautenschlaeger said late
on Monday that an asset-buying programme should be a last resort
- showing the strength of opposition in some quarters at the ECB
to such a policy.
Yields on all euro zone government bonds edged up by around
1 basis points, while German Bund futures - the most traded
fixed income security in the currency bloc - dropped 15 ticks to
a day's low of 146.81.
The euro hit a plateau, paring some of the gains it made
against the U.S. dollar on Monday as markets stayed on
guard for minutes from the Federal Reserve's last meeting due to
be released on Wednesday.
The minutes will be scoured for hints on when the policy
committee might consider raising interest rates, especially with
strong U.S. labour data last week underlining the steady
recovery in the world's largest economy.
It was a quiet session in Asia overnight, with the region's
stocks tracking sideways as the earnings season kicked off with
disappointing guidance from regional tech heavyweight Samsung.
MSCI's broadest index of Asia-Pacific shares outside Japan
was a fraction firmer, touching a three-year
high of 502.27 during the session.
Samsung Electronics Co Ltd said its operating
profit probably fell 24.5 percent in April-June to 7.2 trillion
won ($7.12 billion), under the 8.3 trillion mean estimate from
38 analysts polled by Thomson Reuters.
However, its shares still managed to edge up 0.2 percent,
perhaps because they have been falling for most of the past
month as the market priced in a poor result.
The earnings season kicks off with Alcoa .AA later on
Tuesday and dozens of major companies are scheduled to report
next week, including numerous Dow components.
Profits are forecast to grow 6.2 percent for the quarter,
according to Thomson Reuters data, but investors see a slight
chance of a return to double-digit growth for the first time in
nearly three years.
In commodity markets, gold edged a fraction lower to
$1,317.70 an ounce XAU=, having held to a relatively tight
$1,305.90 to $1,332.10 range for the past two weeks.
Oil prices extended their recent decline as events in Iraq
and Ukraine have so far not led to any serious disruption in
flows. Brent LCOc1 dipped 46 cents to $109.78 a barrel and U.S.
oil CLc1 lost 12 cents to $103.41 a barrel.
(Editing by Gareth Jones)