European shares dip as construction firms fall

* FTSEurofirst 300 down 0.2 pct

* Construction stocks hit by Hochtief’s profit warning

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

By Harpreet Bhal

LONDON, April 11 (Reuters) – European shares slipped on
Monday ahead of the first quarter earnings season in the United
States as jitters resurfaced that high raw material prices could
further strain corporate margins.

A fresh 7.1 magnitude earthquake in Japan also stretched
nerves. An earlier tsunami warnings, however, was subsequently
lifted. [ID:nL3E7FA058]

By 1048 GMT, the pan-European FTSEurofirst 300 (.FTEU3: Quote, Profile, Research)
index was down 0.2 percent at 1,146.65 points, with strong
support around its 50-day moving average, at 1,144.87 points.

U.S. aluminium company Alcoa (AA.N: Quote, Profile, Research) kicks off the U.S.
reporting season after markets close on Monday, with glued to
companies’ outlooks for the medium-term in light of strong crude
prices.

“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.

Greetfeld said investors will also pay close attention to
any reference to supply chain disruptions following the
earthquake in Japan, with the auto and semiconductor sector seen
particularly vulnerable.

“There may be indirect effects that are difficult to
discover at this point in time and will become clearer as April
progresses.”

Construction firms were among the fallers, with Germany’s
Hochtief (HOTG.DE: Quote, Profile, Research) shedding 8.5 percent after it slashed its
outlook on an expected big loss at its Australian Leighton
(LEI.AX: Quote, Profile, Research) unit. Lafarge (LAFP.PA: Quote, Profile, Research), Holcim (HOLN.VX: Quote, Profile, Research) and Vinci
(SGEF.PA: Quote, Profile, Research) fell 0.9 to 1.5 percent.

Limiting further losses, heavyweight mining shares rose as a
weaker dollar supported metals and gold prices. BHP Billiton
(BLT.L: Quote, Profile, Research) was among the biggest risers, up 2.2 percent, with a
ratings upgrade by Credit Suisse helping its gains.

UK lenders Barclays (BARC.L: Quote, Profile, Research) and Royal Bank of Scotland
(RBS.L: Quote, Profile, Research) were also on the rise, up 3.2 and 2.1 percent
respectively, on relief following a key report on the future
structure of banking in Britain. [ID:nLDE7371AX]

“They’ve got away with it, apart from Lloyds which might
have to sell off more assets,” said John Smith, senior fund
manager at Brown Shipley.

“It could have been harsher and there’s relief that it’s
been in line with expectations.”

CRUDE WORRIES

Brent crude prices (LCOc1: Quote, Profile, Research) fell below a 32-month high around
$126 after the African Union said Libya’s Gaddafi had accepted a
roadmap to end the civil war, but gains since the beginning of
the year have added almost 32 percent to its price, prompting
concern over the impact of sustained high prices.

“We also feel that the rise in oil prices, if sustained, has
the potential to be more damaging for some of the pro-cyclical
export sectors. Our preferences include financials, utilities
and to a lesser extent telecom,” RBS analysts wrote in a note.

Concerns over high raw material prices hit soft drinks
bottler Coca-Coca Hellenic (HLBr.AT: Quote, Profile, Research), which dropped 4.1 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.

(Additional reporting by Blaise Robinson in Paris; Editing
by David Cowell)

European shares dip as construction firms fall