European shares stung by BP, recovery doubts

* FTSEurofirst 300 down 1.4 pct

* BP sinks after “top kill” failed on Saturday

* Prudential rises; AIG snubs Asian unit deal

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

By Harpreet Bhal

LONDON, June 1 (BestGrowthStock) – European shares fell on Tuesday,
with BP (BP.L: ) slumping after an attempt to plug a U.S. oil
spill failed, while easing manufacturing growth in the euro zone
and China fuelled pessimism over global economic recovery.

By 0824 GMT, the pan-European FTSEurofirst 300 (.FTEU3: )
index of top shares shed 1.4 percent at 986.86 points, a day
after shares posted their worst monthly performance since
February 2009.

The index shed 5.8 percent in May, hit by intensifying fears
that a sovereign debt crisis in the euro zone could derail the
global economic recovery.

“We’ve had a fantastic run since March last year and at some
stage there was going to be a level of pullback. There is very
little reason at the moment for people to be adding more risk,”
said Justin Urquhart Stewart, director at Seven Investment
Management.

BP sank 12.3 percent, as its attempt to plug an oil leak in
the Gulf of Mexico failed on Saturday. The firm said the
financial cost of tackling the spill totalled $990 million as it
prepares for a new attempt to control the flow. [ID:nLDE650082]

BP shares, which hit their lowest level in more than a year,
have lost more than a third of their value since the oil spill
started six weeks ago, a wipeout of about 43 billion pounds
($62.75 billion) in market capitalisation.

On the economic front, manufacturing activity in the euro
zone expanded in May at a considerably more sluggish pace than
April’s 46-month high, fuelling doubts over the sustainability
of an economic recovery. [ID:nSLAVGE65K]

Manufacturing growth in China and South Korea also slowed,
amid growing uncertainty over what damage Europe’s debt crisis
may do to Asia’s export-dependent economies.

Growth in the Spanish manufacturing sector eased in May, as
the consumer goods sector struggled, indicating that an economic
recovery in Spain will likely remain weak for a long time.
[ID:nSLAVGE65I]

Across Europe, Britain’s FTSE 100 (.FTSE: ), Germany’s DAX
(.GDAXI: ) and France’s CAC 40 (.FCHI: ) lost 1.5 to 1.7 percent.

Spain’s IBEX (.IBEX: ), Portugal’s PSI 20 (.PSI20: ) and Italy’s
MIB (.FTMIB: ) fell 0.4 to 2.4 percent.

PRU GAINS

Prudential (PRU.L: ) rose 4.2 percent after U.S. insurer AIG
(AIG.N: ) announced that it would not accept a revised takeover
offer for its Asian life insurance unit. [ID:nTOE64U07Y]

Other gainers included Irish airline Ryanair (RYA.I: ), which
added 2.8 percent, as it brought forward plans to pay its first
dividend since being floated in 1997 after swinging back to a
full-year profit ahead of most rivals. [ID:nLDE65002V]

European banks were on the back foot, pressured by a report
by the European Central Bank (ECB) on Monday which said that
euro zone banks face another 195 billion euros ($239 billion) in
potential writedowns to the end of 2011 in a second round of
losses from the financial crisis. [ID:nLAG006303]

Barclays (BARC.L: ), Societe Generale (SOGN.PA: ), BNP Paribas
(BNPP.PA: ) and Deutsche Bank (DBKGn.DE: ) shed 1 to 2.5 percent.

Worries over the outlook for global economic recovery also
pressured commodity prices, with crude (CLc1: ) and metals prices
retreating.

Energy firms fell across the board, with Royal Dutch Shell
(RDSa.L: ), Total (TOTF.PA: ), Repsol (REP.MC: ) and ENI (ENI.MI: ) off
1.6 to 2.3 percent.

Stock Investing

(Additional reporting by Blaise Robinson in Paris; Editing by
Sharon Lindores)
($1=.6852 Pound)

European shares stung by BP, recovery doubts