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European shares slip as Irish bailout fails to cheer

* FTSEurofirst 300 down 0.7 percent

* Banks top losers; Bank of Ireland falls sharply

* Automobile shares advance; broker note helps

LONDON, Nov 22 (Reuters) - European share prices dipped on Monday after Ireland’s bailout failed to quash fears that the debt crisis will spread to other euro zone economies, although analysts still expect the market to see the year out on a rising trend.

The FTSEurofirst 300 .FTEU3 index of top European shares was down 0.7 percent at 1,094.46 points by 1311 GMT. It had risen to 1,110.42 earlier in the session in opening reaction to the proposed deal between Ireland, the European Union and the International Monetary Fund to rescue Ireland's shattered banks.

Technical charts pointed towards more gains to come in the index this year, with the short-term trend channel sending positive signals and a key index hovering above its 50-day and 200-day moving averages.

But on Monday European and IMF officials began thrashing out details of a loan package for Ireland which is expected to total 80 to 90 billion euros while the government puts the finishing touches to a 15 billion-euro ($20.5 billion) austerity plan.

“Once we have the detail we will see how well it works. But I am a little bit afraid that attention will shift towards Portugal and Spain,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.

“You solve the problems for a while. The markets are realising that the short-term liquidity problem is fixed, but the solvency problems remain on the table and that’s something which is not going to go away anytime soon.”

Ireland’s Greens pulled the plug on the deeply unpopular coalition government by calling for a national election in January after the bailout package is in place. [ID:nLDE6AL00M]

Banks were the top losers, with the STOXX Europe 600 banking index .SX7P slipping 1.7 percent. Bank of Ireland BKIR.I sank 20 percent, Allied Irish Banks ALBK.I was down 5.8 percent and National Bank of Greece NBGr.AT fell 3.7 percent.

Across Europe, Ireland's ISEQ .ISEQ was down 1.3 percent, Spain's IBEX .IBEX fell 1.8 percent and Italy's FTSE MIB index .FTMIB slipped 1.4 percent. The Thomson Reuters Peripheral Eurozone Countries Index .TRXFLDPIPU was down 1.4 percent.

“It remains unclear at this stage exactly what is planned for the banks. The terms ‘contingency fund’ and ‘standby fund’ to demonstrate the banks have ‘firepower’ implies no early incremental recap but that capital would be available if required,” said Emer Lang, analyst at Davy Research.

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Europe struggles with debt graphic

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Ireland’s corporate tax rate vs. a selection of countries

r.reuters.com/fuh85q

EDREF - New interactive timeline on the eurozone crisis

link.reuters.com/nyx95q

Asset returns since QE2 hints and announcement

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POSITIVE TECHNICALS

Nevertheless analysts said that the European stock market still has the potential to keep rising, albeit at a slow pace, in the remaining part of 2010 as company earnings have been relatively good.

The FTSEurofirst 300 index has gained 18 percent in the past six months, including a 10 percent rise in the last three months.

“It’s very much possible that going into the end of the year the mood will remain more or less uplifted. We will continue to drift gently higher,” Gijsels said.

The technical picture remained positive, with the index staying resilient despite the concerns about euro zone debt. The benchmark index was still within striking distance of its two-year highs at 1,120.48, touched earlier this month and stayed well above its 50-day and 200-day moving averages.

“The fact that the move off the lows coincided with a test of the short-term uptrend is encouraging and suggests that this move has yet to run its course,” said Bill McNamara, technical analyst at Charles Stanley.

Miners came under pressure from lower metals prices, which softened on concerns about the demand outlook in top metals consumer China. The STOXX Europe basic resources index .SXPP fell 0.8 percent, while Anglo American AAL.L, Rio Tinto RIO.L and ENRC ENRC.L fell 0.6 to 0.8 percent.

On the brighter side, the STOXX Europe 600 Automobiles & Parts .SXAP index rose 1 percent on a positive BofA Merrill Lynch note. BMW BMWG.DE, Volkswagen VOWG_p.DE and Porsche PSHG_p.DE gained 2.3 to 5.1 percent. (Additional reporting by Joanne Frearson; Graphics by Scott Barber; Editing by Greg Mahlich)

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