Europe shares slip from 5-wk high; Hochtief falls

* FTSEurofirst 300 closes 0.2 pct lower

* Construction stocks hit by Hochtief profit warning

* UK banks rise on relief after Government report

By Brian Gorman

LONDON, April 11 (Reuters) – European shares fell slightly
on Monday, with Hochtief (HOTG.DE: Quote, Profile, Research) leading the construction
sector lower after a profit warning, though strategists were
confident the market’s recent rally would resume.

The pan-European FTSEurofirst 300 (.FTEU3: Quote, Profile, Research) index fell 0.2
percent to close at 1,146.35 points, still above its 50-day
moving average after hitting a five-week closing high on Friday.
Volume was 81.7 percent of the 90-day average. The index is
still up more than 7 percent from its 2011 low, hit in
mid-March.

“Investors want to look through some of the issues we’ve
had, like Libya, and take more risk,” said David Rickards,
global co-head of equity research at Macquarie in London.
“European valuations still look good.”

The VDAX-NEW volatility index (.V1XI: Quote, Profile, Research), Europe’s main
barometer of investor anxiety, fell 1.3 percent to near a
seven-week low. The lower the index, the higher the market’s
desire for risk.

Germany’s Hochtief (HOTG.DE: Quote, Profile, Research) shed 9.5 percent after it
slashed its outlook on an expected big loss at Australian unit
Leighton (LEI.AX: Quote, Profile, Research). [ID:nL3E7FA0EK]

Lafarge (LAFP.PA: Quote, Profile, Research), Holcim (HOLN.VX: Quote, Profile, Research) and Vinci (SGEF.PA: Quote, Profile, Research) fell
between 1.5 and 1.8 percent.

Carmakers were lower after brokers turned bearish on the
sector, with Credit Suisse downgrading Daimler (DAIGn.DE: Quote, Profile, Research), down
2.7 percent. Renault (RENA.PA: Quote, Profile, Research) fell 2.2 percent, after a source
close to the company told Reuters that Chief Operating Officer
Patrick Pelata had resigned, following an embarrassing fiasco
over industrial espionage allegations. [ID:nLDE73A0AY]

On the upside, some British banks rose after a government
commission’s report on the separation of retail operations from
riskier investment banking activities was less demanding than
some had expected. [ID:nLDE7371AX]

Barclays (BARC.L: Quote, Profile, Research) rose 2.8 percent; state-backed Royal Bank
of Scotland (RBS.L: Quote, Profile, Research) rose 2.3 percent.

“The banks will be breathing a sigh of relief. (Commission
leader John) Vickers and his colleagues have heeded bankers’
warnings and shied away from recommending a total split of
retail and investment banking operations — the outcome banks
feared the most,” said Paul Mumford, senior investment director
at Cavendish Asset Management.
Miners also helped limit the index’s losses on strong metals
prices, supported by encouraging China copper imports data.
Heavyweights BHP Billiton (BLT.L: Quote, Profile, Research) and Xstrata (XTA.L: Quote, Profile, Research) were up
1.8 percent and 0.9 percent.

U.S. EARNINGS

Some traders were cautious ahead of the start of the U.S.
first-quarter earnings season, due to be kicked off by aluminium
company Alcoa (AA.N: Quote, Profile, Research) after markets close on Monday. Investors
will look at companies’ outlook statements for indications of
the effect of higher input prices on margins.

“Sales trends in the first quarter will be supportive for
earnings growth. However, investors will pay close attention to
the outlook regarding input costs and margins for the second and
third quarter, and here the picture looks less favourable,” said
Tammo Greetfeld, equity strategist at UniCredit.

Soaring oil prices and inflation in emerging economies pose
new risks to global recovery but are not yet strong enough to
derail it, the International Monetary Fund said on Monday.
[ID:nN08193089]

Concerns over high raw material prices hit soft drinks
bottler Coca-Coca Hellenic (HLBr.AT: Quote, Profile, Research), which dropped 2.6 percent
to feature as the biggest faller on the FTSEurofirst 300 index,
with traders highlighting concerns that persistently high oil
prices would burden its costs.

Brent crude prices (LCOc1: Quote, Profile, Research) fell below $125 a barrel on
Monday, pulling back from last week’s 32-month peaks, as
investors cautiously eyed an African Union plan to halt the
conflict in Libya.
(Additional reporting by Harpreet Bhal; Editing by Will
Waterman)

Europe shares slip from 5-wk high; Hochtief falls