Europe shares fall as China ups rates; trade thin

* FTSEurofirst 300 falls 0.8 pct; volumes light

* China rate hike weighs on shares

* Autos hit by Beijing car registrations quota cut

* For up-to-the-minute market news, click on [STXNEWS/EU]

By Brian Gorman

LONDON, Dec 27 (BestGrowthStock) – European stocks fell on Monday in
thin trade, after an interest rate rise in China sparked worries
about global growth, with Europe’s carmakers badly hit by the
rate hike and also by Beijing’s move to cut registration quotas.

At 1200 GMT, the FTSEurofirst 300 (.FTEU3: ) index of top
European shares was down 0.8 percent at 1,138.21 points. But
trading was subdued, with UK markets closed for a holiday.

Auto shares fell with the STOXX Europe 600 Automobiles &
Parts (.SXAP: ) index down 3.2 percent. Daimler (DAIGn.DE: ),
Peugeot (PEUP.PA: ), Porsche (PSHG_p.DE: ), BMW (BMWG.DE: ) and
Volkswagen (VOWG.DE: ) fell between 2.1 and 5.6 percent.

Beijing announced measures to limit new car registrations to
tackle congestion in the Chinese capital. [ID:nTOE6BN02B]

“They may do the same in other cities in China, and it will
hurt the German makes like Daimler,” said Heino Ruland,
strategist at Ruland Research, in Frankfurt.

“Banks are also suffering, with the China rate hike and as
it looks like Portugal will be forced to accept the rescue
package of the IMF and EU.”

Spanish banks Banco Santander (SAN.MC: ) and BBVA (BBVA.MC: )
fell 2.8 and 1.6 percent respectively.

On Saturday — Christmas Day — China’s central bank
surprised investors with a 25-basis-point rate rise in benchmark
deposit and lending rates, its second increase in just over two
months, as it looks to rein in inflation.

The People’s Bank of China said it would raise the benchmark
lending rate by 25 basis points to 5.81 percent and lift the
benchmark deposit rate by 25 basis points to 2.75 percent.
[ID:nTOE6BO010]

Across Europe, Germany’s DAX (.GDAXI: ) and France’s CAC 40
(.FCHI: ) fell 1.4 and 1.2 percent respectively; Spain’s IBEX 35
(.IBEX: ) fell 1.9 percent.

The pan-European index has gained 6.7 percent in December
and is still on track for its biggest monthly gain since March.

The benchmark is up more than 76 percent from its lifetime
low of March, 2009, with several major economies having emerged
from recession, helped by stimulus from governments and central
banks worldwide.
Traders expect low volumes this week as many institutional
investors have closed the books for the year.

“This implies low trading volumes, like last week, bearing
potential risk of large swings in either direction,” traders at
Close Brothers said.

DNO RISES

Among individual shares, Norwegian oil firm DNO (DNO.OL: )
rose 8 percent after Iraq’s new oil minister is quoted as saying
his government would honour production contracts like one DNO
has with the Kurdish regional government. [ID:nLDE6BQ0AI]

Swedish specialty steelmaker SSAB (SSABa.ST: ) rose 3 percent
after Handelsbanken Capital Markets raised its rating to
“accumulate” from “reduce”.

In macroeconomics, the Conference Board leading economic
index (LEI) for the euro zone rose 0.7 percent to 114.3 in
November, a sharper rise than October’s 0.3 percent and one that
points to continued economic recovery. [ID:nLDE6BQ0C6]

Ruland said he believed the market rally would resume after
the holiday period. “Investors have been selling bonds and
buying equities, and this will continue as equities still look
cheap,” he said.

U.S. futures pointed to a lower open on Wall Street, which
resumes trade after the Christmas break.
(Additional reporting by Harro ten Wolde; Editing by Jane
Merriman)

Europe shares fall as China ups rates; trade thin