Oil and Gas

European shares down; energy, banks lead lower

* FTSEurofirst 300 falls 1 pct after 6-day winning run

* Energy shares down, led lower by BP

* Banks, miners also under pressure

LONDON, Jan 7 (Reuters) - European shares declined about 1 percent by mid-morning Wednesday after rising the previous six sessions, with British oil major BP BP.L leading the energy sector down and banking shares coming under renewed pressure.

BP fell 3.5 percent on market talk the company was telling analysts that its fourth-quarter earnings would be lower than expected, three dealers said. BP declined comment.

At 0933 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 1 percent at 881.11 points after finishing 1.9 percent higher in the previous trading session, reaching its highest closing level since Nov. 10.

The index lost 45 percent in 2008.

Energy stocks also tracked crude CLc1, which fell as profit taking outweighed escalating tensions in the Middle East and widening supply cuts from the Russian gas row. Royal Dutch Shell RDSb.L and GDF Suez GSZ.PA shed 0.8 to 2.1 percent.

Banks were lower, with Royal Bank of Scotland RBS.L declining 5.5 percent, Standard Chartered STAN.L losing 5.8 percent, HBOS HBOS.L down 1.5 percent, HSBC HSBA.L falling 1.4 percent and UBS UBSN.VX down 1.3 percent.

“The markets appear to be in limbo ... with two very distinct camps. One side are observing the current facts -- poor economic data, increased job losses, exacerbated by the news from Alcoa last night, and worryingly slow retail numbers,” said Chris Hossain, senior sales manager at ODL Securities.

“The other camp are looking to the possibility of an economic rebound, fuelled by lower interest rates and falling energy and food costs. Market sentiment appears to be on hold.”

Companies across the world continued to feel the impact of a deep economic downturn. Alcoa Inc AA.N, the largest U.S. aluminium producer, said it will slash more than 15,000 jobs, halve capital spending and sell four businesses as it reduces aluminium production.

Across Europe, the FTSE 100 index .FTSE, Germany's DAX .GDAXI and France's CAC 40 .FCHI were down 0.4 to 1.3 percent.


Grim corporate news continued to come in. The U.S. operations of LyondellBasell, the world's third-largest petrochemical company of which Swiss lender UBS UBSN.VX is a major creditor, filed for bankruptcy protection under the weight of a massive debt load and falling demand for its products.

British retailer Marks & Spencer MKS.L reported its worst quarterly sales performance for a decade and said it would cut around 1,230 jobs in a bid to save money in a tough trading environment.

Concerns about a deep economic downturn continued to haunt investors. Britain’s Chancellor Alistair Darling also said the UK was “far from through” the recession, and that the job to achieve economic recovery was a long way from completion. [ID:nL7363660]

Minutes of a December rate-setting meeting released on Tuesday showed Federal Reserve officials believed the U.S. economy would face “substantial” risks even as benchmark interest rates were cut to near zero, with some worrying about the risk of deflation.

Mining stocks fell as concerns mounted that a recession would hurt demand for basic metals. BHP Billiton BLT.L, Anglo American AAL.L, Vedanta Resources VED.L, Antofagasta ANTO.L and Rio Tinto RIO.L dropped 0.3 to 4.1 percent.

Elsewhere Italy's Enel ENEI.MI was close to securing 8 billion euros ($10.7 billion) in financing to acquire Acciona's ANA.MC 25 percent stake in Endesa ELE.MC, Cinco Dias reported, citing unnamed sources close to the operation. Enel was up 0.2 percent, while Endesa rose 1.4 percent. (Editing by David Holmes)