European shares dip; UBS off on investment bank woes

* FTSEurofirst 300 index down 0.2 percent

* ArcelorMittal drags down basic resources shares

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

By Harpreet Bhal

LONDON, Oct 26 (BestGrowthStock) – European shares retreated on
Tuesday with UBS (UBSN.VX: ) weak after reporting losses at its
investment bank, while a muted demand forecast from steelmaker
ArcelorMittal (ISPA.AS: ) put pressure on basic resources firms.

By 1101 GMT, the pan-European FTSEurofirst 300 (.FTEU3: )
index of top shares was down 0.2 percent at 1,090.00 points,
after rising 0.3 percent on Monday to end near a six-month high.

“Technically, the equity market looks ripe for a bit of
profit-taking. The markets are overbought and have been for a
while, but the fundamentals suggest the downside is limited,”
said Mike Lenhoff, chief strategist at Brewin Dolphin.

UBS (UBSN.VX: ) was among the biggest fallers, down 5.3
percent after Switzerland’s largest bank said its investment
banking arm made a hird-quarter loss. [ID:nLDE69O0N5]

Falls in heavyweight basic resources stocks also put
pressure on the market, with the world’s largest steelmaker
ArcelorMittal (ISPA.AS: ) down 4.9 percent after predicting a
weaker than expected fourth quarter due to muted demand, lower
prices and higher raw material costs. [ID:nLDE69O0SQ]

The weak outlook also stung shares in peers ThyssenKrupp
(TKAG.DE: ) and Salzgitter (SZGG.DE: ), down 2.8 percent and 4.1
percent respectively.

Across Europe, Britain’s FTSE 100 (.FTSE: ) fell 0.6 percent,
Germany’s DAX (.GDAXI: ) was down 0.1 percent and France’s CAC 40
(.FCHI: ) shed 0.5 percent.

QUANTITATIVE EASING HOPES

The FTSEurofirst 300 has rallied 2.7 percent this month
partly on expectations the U.S. Federal Reserve will print more
money to spur the economy, with the STOXX Europe 600 basic
resources index (.SXPP: ) up 6.6 percent as quantitative easing
speculation put pressure on the dollar and boosted metal prices.

However, a lack of uniformity in comments from Fed officials
about further quantitative easing have caused jitters.

Kansas City Fed President Thomas Hoenig called for more
asset buying by the central bank a “very dangerous gamble” while
New York Fed President William Dudley said support will likely
be warranted unless economic conditions improve. [ID:nN25295144]

“We had a rally since August and now people are waiting to
see whether this quantitative easing is going to come through or
not. There are still some uncertainties and the (stock) market
is going to be rangebound until the meeting of the Fed,” said
Koen De Leus, strategist at KBC Securities.

Other individual fallers included Cairn Energy (CNE.L: ), down
6.4 percent after the oil explorer said one of its wells in
Greenland did not result in a commercial discovery and another
failed to reach target depth before the end of the Arctic
drilling season. [ID:nLDE69P09B]

Vestas Wind (VWS.CO: ) shed 5.1 percent after the wind turbine
maker lowered its expectations for the European market in 2011.
[ID:nLDE6650QH]

On the economic front, credit rating agency Standard &
Poor’s raised its outlook on Britain’s triple-A credit rating to
‘stable’ from ‘negative’, saying the government’s spending
review last week showed its resolve to cut the deficit.
ID:nWLA6239]

The announcement came in the wake of data showing Britain’s
economy grew faster than expected in the third quarter, easing
fears the recovery was faltering and dimming the chance of more
quantitative easing from the Bank of England. [ID:nLDE69P0VZ]
(Additional reporting by Atul Prakash; Editing by Dan Lalor)

European shares dip; UBS off on investment bank woes