Rescue plan doubts hit Europe shares; banks retreat

* FTSEurofirst 300 falls 1.9 percent after Monday’s jump

* Banks among biggest fallers after hefty gains on Monday

* Portugal Telecom up after rejecting bid for Vivo

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

By Harpreet Bhal
LONDON, May 11 (BestGrowthStock) – European shares fell on Tuesday
on lingering concerns over Greece’s ability to cut its budget
deficit, retreating after hefty gains a day earlier when a $1
trillion EU/IMF rescue package sparked a relief rally.

By 1108 GMT, the FTSEurofirst 300 (.FTEU3: ) index of top
European shares was down 1.9 percent at 1,019.17 points. It
jumped 7.4 percent on Monday, for its biggest one-day gain since
November 2008, on optimism the massive bailout package would
prevent a euro zone debt crisis.

The European benchmark is up 58 percent from its lifetime
low in March 2009, but down around 2 percent in 2010.

Banks were among the biggest fallers, reversing Monday’s
hefty gains, with Barclays (BARC.L: ), HSBC (HSBA.L: ), Societe
Generale (SOGN.PA: ), BNP Paribas (BNPP.PA: ) and Deutsche Bank
(DBKGn.DE: ) down 2.8-4.4 percent.

Investors were concerned the European Union (EU) and
International Monetary Fund (IMF) rescue package unveiled on
Sunday was not a long-term solution to the euro zone’s debt
problems.

“The EU was never going to be able to give the markets a
single knockout blow. Markets have lost confidence in the EU and
the euro. Until that confidence comes back we’re in for a
volatile period,” said Jim Wood-Smith, head of research at
Williams de Broe.

Adding to the nervousness, the IMF said that even though
Greece’s public debt was sustainable over the medium term, the
nation faced plenty of risks. [ID:nN10120683]

Moody’s credit ratings agency also warned it might downgrade
Portugal’s debt rating and further cut Greece’s to junk status,
noting the contagion effect of Greece’s crisis on other euro
zone members. [ID:nN10227186]

Bucking the weak market, Portugal Telecom (PTC.LS: ) jumped
9.6 percent after the company said it had rejected a 5.7 billion
euro ($7.65 billion) bid from Spanish peer Telefonica (TEF.MC: )
for its 50 percent stake in Brazilian mobile operator Vivo
(VIVO4.SA: ). Telefonica fell 5.5 percent.

Across Europe, Britain’s FTSE 100 (.FTSE: ), Germany’s DAX
(.GDAXI: ) and France’s CAC 40 (.FCHI: ) shed 1.2-2.1 percent.

COMMODITIES PRESSURES

Commodity stocks also fell, as metals and oil prices were
hurt by a stronger dollar. The sector was also pressured by
Chinese inflation edging up to an 18-month high in April and
bank lending topping expectations. [ID:nTOE64A01U]

Anglo American (AAL.L: ), Eurasian Natural Resources (ENRC.L: ),
Kazakhmys (KAZ.L: ), BHP Billiton (BLT.L: ), Xstrata (XTA.L: ) and Rio
Tinto (RIO.L: ) lost 3.3-6.8 percent.

BP (BP.L: ) fell 0.8 percent, on further worries about the
cost of cleaning up and compensation after an oil spill in the
Gulf of Mexico. Within the sector, BG (BG.L: ), Royal Dutch Shell
(RDSa.L: ), Total (TOTF.PA: ) and ENI (ENI.MI: ) fell 0.7-2.7 percent.

Among other movers, SolarWorld (SWVG.DE: ) lost 6.9 percent
after Germany’s biggest solar company’s first quarter sales fell
short of forecasts [ID:nWEA1444].

On the upside, brewer Carlsberg (CARLb.CO: ) rose 3 percent
after first-quarter profit (Read more your timing to make a profit.) fell less than expected as the blow
from a beer tax hike in key market Russia was cushioned by a
solid performance in other markets.

Stock Market Investing

(Editing by Dan Lalor)

Rescue plan doubts hit Europe shares; banks retreat