Europe shares flat as miners rise while banks fall

* FTSEurofirst 300 closes flat, and is flat in 2010

* H&M rises on sales growth

* Trading volume barely 50 pct of 90-day average

By Brian Gorman

LONDON, Aug 16 (BestGrowthStock) – European shares ended flat on
Monday, with stronger miners and retailers offset by weaker
banks as data from both Japan and the United States cast further
doubt about the economic recovery.

Trading volume for the benchmark FTSEurofirst 300 (.FTEU3: )
index of leading European shares was barely 50 percent of the
90-day average.

The index fell 0.02 percent to close at 1,045.47 points,
having moved in and out of positive territory during the day. In
the year to date the index is also flat, with a rally which
kicked in after it hit a lifetime low in March 2009 having
stalled.

The heavyweight banking sector was among Monday’s fallers,
with BNP Paribas (BNPP.PA: ), Credit Suisse (CSGN.VX: ), Deutsche
Bank (DBKGn.DE: ) and Royal Bank of Scotland (RBS.L: ) down between
1.6 and 2.2 percent.

“Much of the data is showing that there’s a bit of a
slowdown. It might put the jobs recovery back by a few quarters,
but our view is that we won’t tip into an outright recession,”
said Richard Lacaille, global chief investment officer at State
Street in London.

“But it’s summer and we’re in that low volume period where
pieces of news are seized on.”

On the upside, Vedanta Resources (VED.L: ) rose 4.9 percent,
having fallen more than 20 percent in the previous four
sessions, after saying it plans to spend up to $9.6 billion
clinching control of Cairn India (CAIL.BO: ). Cairn Energy
(CNE.L: ), which owns 62.4 percent of Cairn India, rose 5.3
percent.

Other miners to gain, as copper and other metals rose with
the dollar weakening, included Anglo American (AAL.L: ), Fresnillo
(FRES.L: ) and Xstrata (XTA.L: ), up between 1.4 and 1.9 percent.
Around Europe, UK’s FTSE 100 index (.FTSE: ) and Germany’s DAX
index (.GDAXI: ) ended the day flat. France’s CAC 40 (.FCHI: ) fell
0.4 percent.

H&M RISES

Among other individual companies, Swedish fashion group
Hennes & Mauritz (HMb.ST: ) rose 4.9 percent after seeing sales at
its established stores rise sharply in July from a year earlier,
as the company reaped the benefit of an improving global economy
and gained market share. [ID:nLDE67F07O]

Britian’s Next (NXT.L: ) rose 0.9 percent.

The Euro STOXX 50 (.STOXX50E: ), the euro zone’s blue chip
index, fell 0.4 percent to 2,698.29 points, retreating for the
fifth session in a row. The next key support level is 2,669.29
points, the index’s 38.2 percent Fibonacci retracement of an
April high to a May low.

Stocks, which have been stuck in a wide range over the past
few months, lack direction, said Steven Bell, director at hedge
fund GLC in London.

“After another blowout earnings season for the second
quarter in the U.S., people are now worried about disappointment
ahead. Equities are cheap in terms of forward P/E ratios
relative to the discount rate, but on the other hand the
economic newsflow is negative,” he said.

“I think nobody has real convictions or confidence at the
moment. We’re running light on risks, looking at tactical trades
more than strategic trades.”

But some analysts remained upbeat on the prospects for
equities. “We’re expecting positive returns by year-end.
Third-quarter earnings don’t have to beat expectations in order
for valuations to continue looking reasonable,” said Lacaille.

Economic news cast further doubt on global recovery. Japan’s
economic growth slowed to a crawl in the second quarter. The
country’s gross domestic product growth for the quarter was 0.1
percent, translating to annualised growth of 0.4 percent, well
below the median market forecast of 2.3 percent.

U.S. home builder sentiment fell for a third straight month
in August to its lowest level in nearly 1-1/2 years, pointing to
a weak housing market.

Further signs that the recovery from the longest and deepest
recession since the 1930s was taking a step back were contained
in another report that showed below-forecast growth in
manufacturing activity in New York state. [ID:nN16205304]
(Additional reporting by Blaise Robinson; Editing by David
Holmes)

Europe shares flat as miners rise while banks fall