China, Ireland drag European shares lower

By Joanne Frearson

LONDON (BestGrowthStock) – European shares fell on Friday on global growth fears after China raised bank reserve requirements and on investor concerns about Ireland’s debt crisis.

The pan-European FTSEurofirst 300 (.FTEU3: ) index of top shares closed down 0.5 percent at 1,102.18 points and ended the week 0.2 percent lower.

But the index was off earlier lows after the Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index, a measure of future U.S. economic growth rose to a 25-week high.

“The week has been dominated by euro zone peripheral debt concerns and I sense very few people want to hold onto positions over the weekend,” Jeremy Batstone-Carr, head of equities at Charles Stanley said.

“The Chinese move had a negative impact on the miners, but the big one investors are watching for is what the Chinese will decide to do about their base rates. We will not get any further information of this until the next inflation data comes out.”

Miners fell on the news, with Antofagasta (ANTO.L: ), BHP Billiton (BLT.L: ), Eurasian Natural Resources Corporation (ENRC.L: ) and Xstrata (XTA.L: ) down 1.3 to 1.8 percent.

The People’s Bank of China said it would increase banks’ required reserves for the second time in two weeks to fight against inflation, a move that could limit future Chinese consumption.

Market sentiment was also knocked after a poll of participants at a European Banking Congress said a rescue package for Ireland, may not be enough to prevent contagion in the euro zone.

EU sources have said a financial aid plan to help Ireland cope with its battered banks would be unveiled next week.

BANKS FALL

Banks, sensitive to changes on the macro environment featured among the worst performers, with the STOXX Europe 600 Banks (.SX7P: ) down 1.6 percent.

BBVA (BBVA.MC: ), Banco Santander (SAN.MC: ), Standard Chartered (STAN.L: ), Societe Generale (SOGN.PA: ) and Natixis (CNAT.PA: ) slipped 1 to 2.3 percent.

Elsewhere, the Euro STOXX 50 (.STOXX50E: ), the euro zone’s blue-chip index, fell 0.3 percent at 2,845.75 points, with technical analysts saying European equity indices had entered a period of consolidation.

“Below 2,880, expect a continuation of consolidation, with a retest of 2,775,” Trading Central technical analyst Nicolas Suiffet said. “Only a push above 2880 would reinstate a bullish bias.”

Across Europe, the FTSE 100 (.FTSE: ) index was down 0.6 percent, Germany’s DAX (.GDAXI: ) was 0.2 percent higher and France’s CAC 40 (.FCHI: ) was down 0.2 percent.

The Thomson Reuters Peripheral Eurozone Countries Index (.TRXFLDPIPU: ) was down 0.2 percent.

(Reporting by Joanne Frearson)

China, Ireland drag European shares lower