European shares dip, drugmakers offset rising banks

* FTSEurofirst 300 down 0.3 pct after strong rally last week

* Banks mostly higher as stress test results reassure

* GSK drops on media report it is eying Genzyme

* Euro STOXX 50 tests resistance level, fails to stay above

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

By Harpreet Bhal

LONDON, July 26 (BestGrowthStock) – European shares reversed early
gains and dipped on Monday, falling below a key resistance
level, with GlaxoSmithKline’s (GSK.L: ) fall on a report of its
interest in Genzyme (GENZ.O: ) offsetting gains in banks.

Most banks gained ground on relief that the stress test
results announced after European markets closed on Friday
contained no major bad surprises.

By 1140 GMT, the FTSEurofirst 300 (.FTEU3: ) index of top
European shares was down 0.3 percent at 1,041.58 points.

The Euro STOXX 50 index (.STOXX50E: ), the euro zone’s
blue-chip index, was 0.1 percent lower at 2,716.65 points,
trading below the 50 percent Fibonacci retracement from a high
in April to a low in May at 2,737.62 points — a level which it
had breached earlier in the session but failed to hold.

“We have seen a nice rally from the recent lows that we saw
this year. Momentum is still positive and traders are looking
for that to continue,” said Sandy Jadeja, chief technical
analyst at City Index.

“Historically the month of July has looked towards higher
prices but not by more than one and a half to two percent.”

GlaxoSmithKline (GSK.L: ) fell 2.2 percent after the Wall
Street Journal cited a source as saying that the drugmaker made
a “very casual approach” to Genzyme, asking to be notified if
the U.S. biotech group considered selling itself.
[ID:nN25160145]

Within the sector, AstraZeneca (AZN.L: ), Novartis (NOVN.VX: )
and Roche (ROG.VX: ) shed 1.3 to 1.9 percent.

Across Europe, Britain’s FTSE 100 (.FTSE: ), Germany’s DAX
(.GDAXI: ) and France’s CAC 40 (.FCHI: ) shed 0.1 to 0.3 percent.

STRESS TEST RELIEF

Banks gained ground, with Banco Popolare (BAPO.MI: ) up 3.2
percent, Societe Generale (SOGN.PA: ) up 2.8 percent and Alpha
Bank (ACBr.AT: ) up 3 percent.

Results of the tests showed only seven of 91 banks — five
small Spanish banks, Germany’s state-rescued Hypo Real Estate
[HRXGe.UL] and Greece’s ATEbank (AGBr.AT: ) — failed the tests,
for an overall capital shortfall of 3.5 billion euros ($4.5
billion). [ID:ID:nLDE66O078]

“There was significant disclosure in the stress tests, so it
leaves analysts in a position to make up their own mind,” said
Bernard McAlinden, investment strategist at NCB Stockbrokers in
Dublin.

“It allows them to distinguish between the vulnerable and
the less vulnerable.”

Bucking the trend, Deutsche Bank (DBKGn.DE: ) fell 1.3 percent
after traders pointed to uncertainty about the company’s
exposure to highly indebted euro zone countries following the
stress tests.

Among other gainers, BP (BP.L: ) climbed 2.2 percent, ahead of
its second-quarter results due on Tuesday. The firm is expected
to install an American troubleshooter as chief executive in the
next 24 hours, replacing Tony Hayward, who has come under fire
for his handling of the worst oil spill in U.S. history.
[ID:nN26145842]

Pearson (PSON.L: ) rose 4.6 percent after the educational
technology provider and Financial Times owner firmed up its
full-year outlook after a strong first-half showing from all its
units, with U.S. schools and FT advertising returning to growth.
[ID:nLDE66O086]

Stock Market Money

(Reporting by Harpreet Bhal. Additional reporting by Brian
Gorman; Editing by Erica Billingham)

European shares dip, drugmakers offset rising banks