* FTSEurofirst 300 down 0.2 pct, Euro STOXX 50 down 0.6 pct
* Vodafone falls 1.7 pct as Verizon bid is denied
* Telecoms shares hit as UBS warns about falling sales for the sector
By Francesco Canepa
LONDON, April 3 (Reuters) - Shares in Vodafone fell 1.6 percent on Wednesday after its U.S. partner Verizon denied reports of a joint takeover of the UK firm with AT&T, dragging down the main pan-European stock index.
Vodafone’s slump knocked 0.4 points off the FTSEurofirst 300 index, which was down 2.5 points, or 0.2 percent, at 1,201.23 points.
The broader telecoms sector also fell, hit by a bearish note by UBS, which warned about worse-than-expected revenues this year and further dividend cuts, also due to the high level of debt.
France Telecom, Telecom Italia and TeliaSonera, which were all downgraded to “sell” by UBS, fell between 0.9 percent and 3.1 percent.
The euro zone blue-chip Euro STOXX 50 index, which was down 0.6 percent at 2,662.85 points, although the index held above its recent lows in the 2,600 area, seen by chartists as key to confirm the market remained in an uptrend.
“We’ve bounced from (2,600) once again so we assume we would be testing once again the 2,740-2,750 area,” said Valerie Gastaldy of Paris-based technical analysis firm Day-By-Day.
She cautioned it was crucial that the STOXX 600 banking index, down 0.7 percent at 164.97, kept above its recent low around 160 to confirm the market was in a bullish trend.
Banking shares have the largest exposure to the region’s public debt and financing conditions and can be a gauge of investor confidence in Europe’s ability to tackle its crisis.
Basic resources stocks were also a drag on the indexes, falling 1.8 percent on revived concerns about an early end to the U.S. Federal Reserve’s quantitative easing programme, which is seen as key to supporting global demand for metals.
Policy dove Charles Evans, president of the Federal Reserve Bank of Chicago, and anti-inflation hawk Jeffrey Lacker, chief of the Richmond Fed, sparred pointedly on Thursday over the risks posed to inflation by the U.S. central bank’s asset-buying programme.
After what Evans described as “very positive” recent payroll reports, traders were closely watching ADP data on private-sector hiring on Wednesday for clues on the likely outcome of Friday’s big jobs data, exepcted to show an improving economy.
“If you get inflation fears relating to ADP numbers, they (the Fed) would reduce QE and that might happen within this year,” the head of a German trading desk said.
“The main topic is how long they can control the real interest rate as they are doing, with a very good track record, at the moment. If they can do it, you’re in a bull market, not a bear market.”