US data drags European shares to 1-mth closing low

* FTSEurofirst 300 down 1.5 pct; hits 1-month closing low

* Disappointing U.S. economic data hurts sentiment

* Banking, energy shares among top decliners in Europe

By Atul Prakash

LONDON, Aug 19 (BestGrowthStock) – European shares hit a one-month
closing low on Thursday after data showed new claims for U.S.
jobless benefits rose to a nine-month high and factory activity
in the Mid-Atlantic region unexpectedly contracted.

Disappointing economic numbers put pressure especially on
financial and commodity shares, with the STOXX Europe banking
index (.SX7P: ), the basic resources index (.SXPP: ) and the oil and
gas index (.SXEP: ) falling 1.9 to 2 percent.

The FTSEurofirst 300 (.FTEU3: ) index of top European shares
fell for a second straight session to end down 1.5 percent at
1,036.84 points, the lowest close since July 21. Volumes on the
index were 70 percent of its 90-day daily average.

“The U.S. macroeconomic numbers once again increased doubts
regarding the strengths of the U.S. economy in the second half
and raised concerns that the economy might be weakening more
than previously anticipated,” said Tammo Greetfeld, equity
strategist at UniCredit in Munich.

“Investors … will increasingly ask themselves how much
scope the U.S. central bank actually does have to successfully
counter an economic downturn, if needed.”
Initial claims for state unemployment benefits increased for
a third straight week, rising 12,000 to a seasonally adjusted
500,000 in the week ended Aug. 14, while factory activity in the
U.S. Mid-Atlantic region unexpectedly declined in August to its
lowest level in more than a year. [ID:nOSL014687][ID:nN19350083]

“These results did nothing to allay the rising fear that
global economies risk sinking back into the red. Only Germany
seems to be maintaining a positive outlook,” said Ben Critchley,
sales trader at IG Index.

European shares had traded higher earlier in the session
after Germany’s Bundesbank raised its forecast for the country’s
economic growth this year, but the gains evaporated in the face
of the U.S. economic numbers. [ID:nBAF004214]

Financials were among the top losers, with HSBC (HSBA.L: ),
Barclays (BARC.L: ), BNP Paribas (BNPP.PA: ), Societe Generale
(SOGN.PA: ) and Credit Agricole (CAGR.PA: ) down 1.7 to 3.5 percent.

Energy shares came under pressure as America’s economic
numbers raised concerns about oil demand in the world’s largest
economy. BP (BP.L: ), Royal Dutch Shell (RDSa.L: ) and Total
(TOTF.PA: ) fell 2.4 to 2.7 percent.

Across Europe, the FTSE 100 (.FTSE: ), Germany’s DAX (.GDAXI: )
and France’s CAC 40 (.FCHI: ) were down 1.7 to 2.1 percent, while
the Thomson Reuters Peripheral Eurozone Countries Index
(.TRXFLDPIPU: ) was down 2.1 percent.

TECHNICAL PICTURE

The Euro STOXX 50 (.STOXX50E: ), the euro zone’s blue-chip
index, fell 2 percent to 2,675.02 points. It made several
attempts in recent sessions to stay above 2,738 points — its
50-percent Fibonacci retracement of a fall from a high in April
to a low in May — but faced strong resistance.

The index closed below its 50-day moving average of 2,698.57
points and is expected to find some support at around 2,669.29,
a 38.2-percent retracement level, and further at around 2,584.75
— a 23.6 percent retracement level.

Appetite for risky assets fell, with the VDAX-NEW volatility
index (.V1XI: ) jumping 8 percent. The higher the index, which is
based on sell and buy options on Frankfurt’s top-30 stocks
(0#.GDAXI: ), the lower the market’s desire to take risk.

Among individual movers, Holcim (HOLN.VX: ) tumbled 6.3
percent after the world’s second-biggest cement maker’s
first-half earnings missed forecasts and it said government
austerity programmes would limit infrastructure spending.

Among a few gainers, Nokia (NOK1V.HE: ) rose 1.5 percent after
a Finnish newspaper reported that the company could be cheap
enough to become an acquisition target, and on expectations of
an improving offering of smartphones.

“We are of the opinion that a broad sideways movement for
the European stocks in the second half of 2010 will be the best
case scenario. We do not expect a renewed uptrend in equity
markets in the second half,” Greetfeld of UniCredit said.
(Editing by Will Waterman)

US data drags European shares to 1-mth closing low