Europe shares slip from 7-week peak on China data

* FTSEurofirst 300 ends 0.3 pct lower after 7-week highs

* China inflation data raises concerns of tightening

* Banks slip, autos race ahead; Volkswagen surges

By Atul Prakash

LONDON, March 11 (BestGrowthStock) – European shares slipped from a
seven-week high to end lower on Thursday as economic numbers
failed to impress investors and a spike in Chinese inflation
raised the prospects of interest rate hikes in the country.

The FTSEurofirst 300 (.FTEU3: ) index of top European shares
finished 0.3 percent lower at 1,056.00 points after hitting a
seven-week high of 1,060.64 earlier in the session. The index
climbed 26 percent in 2009 and has surged 63 percent since
hitting a record low in early March last year.

Volumes were 80 percent of the 90-day daily average.

Banks were among the top losers, with STOXX Europe banking
index (.SX7P: ) falling 0.7 percent. Standard Chartered (STAN.L: ),
HSBC (HSBA.L: ), Barclays (BARC.L: ), BNP Paribas (BNPP.PA: ), Societe
Generale (SOGN.PA: ) and Natixis fell 0.6 to 1.8 percent.

“We have a lack of drivers probably in the short term,” said
Gerhard Schwarz, head of global equity strategy at UniCredit.

“Chinese figures that came out this morning remind us that
we will see a further tightening of conditions globally over the
next couple of months.”

Figures showed Chinese consumer inflation jumped to a
16-month high in February and a raft of other domestic data
displayed broad-based strength, providing fresh arguments for
policy tightening sooner rather than later. [ID:nTOE6290B5]

And in the UK, Britons’ expectations for inflation over the
next 12 months rose to 2.5 percent in February from 2.4 percent
in November, a Bank of England survey showed. [ID:nBOE002272]

U.S. macro-economic data also failed to cheer investors. The
number of U.S. workers filing new applications for unemployment
benefits fell slightly less than expected last week, hinting at
a slow labour market recovery. [ID:nN11203719]

Across Europe, Britain’s FTSE 100 index (.FTSE: ), Germany’s
DAX (.GDAXI: ) and France’s CAC 40 (.FCHI: ) fell 0.1-0.4 percent.

“Tomorrow will see the end of a week that has been
uneventful from a financial market perspective,” said Angus
Campbell, head of sales at Capital Spreads.

“We’ve gone nowhere since Monday as indecision seems to
reign supreme for investors at the moment. At least we get some
more influential economic data being released on Friday in the
form of U.S. retail sales and the University of Michigan
sentiment,” he added.

MINERS DOWN ON CHINA DATA

Concerns over monetary tightening by China, the world’s top
metal consumer, weighed on miners. The STOXX Europe basic
resources index (.SXPP: ) fell 1.6 percent, while BHP Billiton
(BLT.L: ), Anglo American (AAL.L: ), Rio Tinto (RIO.L: ), Xstrata
(XTA.L: ) and ENRC (ENRC.L: ) were down 1.2 to 2.1 percent.

Analysts said European equities were still not expensive,
but investors were staying cautious.

“On valuation grounds, we are trading around 12 times, which
is still quite comfortable,” said Schwarz of UniCredit.

“However, exit strategies of global central banks and the
increasing signs of a peak in leading indicators will weigh on
valuations and inhibit any significant re-rating potential going
forward,” he added.

One-year forward price-to-earnings ratio on the STOXX Europe
600 (.STOXX: ) was 12.5, according to Thomson Reuters data. The
trailing P/E ratio was at 14.7 times, down from 15.6 times at
the start of the year, but sharply up from 7.2 times a year ago.

Auto stocks, however, were in demand. Volkswagen (VOWG_p.DE: )
jumped 7.7 percent as the company eased shareholder fears it
would flood the market with new stock, outlining plans to use a
convertible bond alongside a share sale to help fund an
acquisition spree. [ID:nLDE62A0RV]

BMW (BMWG.DE: ) gained 1.3 percent after the German premium
automaker posted a better-than-expected 2009 profit despite
lower vehicle production. [ID:nLDE6290PH] Daimler AG (DAIGn.DE: ),
Porsche (PSHG_p.DE: ), Peugeot (PEUP.PA: ), Renault (RENA.PA: ) and
Fiat (FIA.MI: ) were up 0.2 to 4.9 percent.

Among individual movers, Lagardere (LAGA.PA: ) lost 7.3
percent after 2009 earnings and a grim outlook from the world’s
largest publisher of consumer magazines disappointed investors.

Investing Tools

(Editing by Elaine Hardcastle)

Europe shares slip from 7-week peak on China data