Utilities, banks weigh on weaker European shares

* FTSEurofirst 300 down 0.2 percent

* Utility, banking shares feature among top losers

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

By Atul Prakash

LONDON, April 6 (Reuters) – European equities drifted lower
on Wednesday after hitting four-week highs, with EDF (EDF.PA: Quote, Profile, Research)
dragging down utilities following a target price cut, while
banks fell on worries about the euro zone debt crisis.

The FTSEurofirst 300 (.FTEU3: Quote, Profile, Research) index of top European shares
was down 0.2 percent at 1,141.49 at 0905 GMT, after earlier
touching 1,146.54, its highest since March 9.

The STOXX Europe 600 Utilities index (.SX6P: Quote, Profile, Research), down 0.8
percent, topped the losers’ list, while EDF fell 4.1 percent
after Citigroup cut its price target and said EDF remained its
least favoured utility in France as well as in the sector.

Banks also lost ground, with the sector index (.SX7P: Quote, Profile, Research) down
0.4 percent. Allied Irish Bank (ALBK.I: Quote, Profile, Research) slipped 16.7 percent as
sentiment worsened after Standard and Poor’s downgraded its
ratings on Irish banks on Tuesday.

Across Europe, Portugal’s PSI 20 (.PSI20: Quote, Profile, Research) fell 1.1 percent,
while Italy’s FTSE MIB (.FTMIB: Quote, Profile, Research) was down 0.7 percent.

“Portugal and the threat of a required bailout continue to
dominate investor thoughts. While any bailout of Portugal is not
seen as tipping Europe over the edge, the failure of the
region’s politicians to resolve the big issues continues to
apply pressure,” Hargreaves Lansdown analyst Keith Bowman said.

“An expected ECB rate hike is also mudding waters, with some
investors believing the move is primarily being made to jolt
politicians into action.”

Investors waited for the sale of Portuguese treasury bills
on Wednesday. Portuguese yields reached new euro lifetime highs
as the country’s ratings were downgraded after the government
collapsed.

Local banks have threatened to stop buying government bonds
unless the country seeks a foreign loan soon. [ID:nLDE73429R]

Retailers, however, gained ground as after Marks & Spencer
(MKS.L: Quote, Profile, Research) beat a sales forecast and said it had not seen a major
deterioration in consumer confidence recently. M&S shares rose
5.3 percent, while the STOXX Europe 600 Retail index (.SXRP: Quote, Profile, Research)
gained 0.6 percent. [ID:nLDE7341M9]
(Reporting by Atul Prakash; Editing by Dan Lalor)

Utilities, banks weigh on weaker European shares