European shares knocked by debt woes; BP sinks

* FTSEurofirst 300 index falls 1 pct

* BP sinks on oil spill worries

* German utilities fall on German tax plan

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

By Joanne Frearson

LONDON, June 8 (BestGrowthStock) – European shares fell on Tuesday,
hitting a near two-week closing low, with investors jittery
after Fitch Ratings said the UK faced a “formidable” fiscal
challenge and BP (BP.L: ) sinking on fresh oil spill worries.

The pan-European FTSEurofirst 300 (.FTEU3: ) index of top
shares closed down 1 percent at 980.35 points, falling for the
third consecutive session and down around 11.9 percent from a
mid-April peak on concerns about the euro zone debt crisis.

BP fell 5 percent, representing a market-cap wipe out of
about 4 billion pounds ($5.8 billion) for the company, after
U.S. President Barack Obama said he wanted to know “whose ass to
kick” over the Gulf of Mexico oil spill.

Other energy companies were under pressure. Royal Dutch
Shell (RDSa.L: ), Total (TOTF.PA: ) and Cairn Energy (CNE.L: ) slipped
0.4 to 0.8 percent.

“Markets remain under pressure,” said Peter Dixon, economist
at Commerzbank. “Until we see any indications that uncertainty
has lifted, the prospects of any decent rally in the European
markets appears distant.”

Investors were also nervous after ratings agency Fitch said
Britain faced a “formidable” challenge to cut government
borrowing and needs more ambitious plans to reduce the deficit
over the medium term.

Meanwhile, the European Union said it would press ahead with
its own banking levy after the world’s top economies failed to
agree on taxing an industry seen as a main culprit behind the
global economic meltdown. [ID:nLDE6571Q6]

Banks featured among the worst performers, falling for the
third day. BNP Paribas (BNPP.PA: ), UBS (UBSN.VX: ), LLoyds Banking
Group (LLOY.L: ) and Barclays (BARC.L: ) slipped 2.2 to 4.1 percent.

UTILITIES WEIGH

Utility stocks E.ON (EONGn.DE: ) and RWE (RWEG.DE: ) fell 3.6
percent and 2.9 percent, respectively, after the German
government said it planned to introduce a new tax on operators
of nuclear power stations.

Tesco (TSCO.L: ) lost 2.4 percent after Chief Executive Terry
Leahy, who built the company into the world’s No.4 retailer,
announced his surprise retirement, leaving new boss Philip
Clarke to tackle the group’s toughest challenge — its
lossmaking U.S. arm.

Earlier, markets had been encouraged by upbeat remarks from
U.S. Federal Reserve Chairman Ben Bernanke, who said European
leaders are committed to ensuring the survival of the euro and
have enough money to meet obligations of heavily indebted member
countries.

He also said the U.S. economy appeared to have enough
momentum to avoid a “double-dip” recession, citing strengthening
consumer and business spending.

Across Europe, the FTSE 100 (.FTSE: ) index was down 0.8
percent, Germany’s DAX (.GDAXI: ) slipped 0.6 percent and France’s
CAC 40 (.FCHI: ) was 1 percent lower.

Spain’s IBEX 35 (.IBEX: ) was down 1.4 percent, Portugal’s PSI
20 (.PSI20: ) lost 1.1 percent and Italy’s benchmark (.FTMIB: ) fell
0.5 percent.
(Reporting by Joanne Frearson; editing by Simon Jessop)

European shares knocked by debt woes; BP sinks