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European shares led lower by miners, oil stocks

Published 06/15/2009, 04:55 AM
Updated 06/15/2009, 05:00 AM
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* FTSEurofirst 300 falls 1.5 percent

* Miners, oils lower as commodity prices slip

* Volvo falls on weaker sales

By Brian Gorman

LONDON, June 15 (Reuters) - European shares fell on Monday morning, tracking losses in Asia, with mining and energy shares hit by lower commodities prices as the U.S. dollar strengthened.

At 0838 GMT, the FTSEurofirst 300 index of top European shares was down 1.5 percent at 872.0 points.

But the European benchmark index is up more than 35 percent from the record low it hit on March 9, as investors have become more confident on the prospects for economic recovery.

The dollar rose across the board on Monday after Russia said the U.S. currency's role as the world's main reserve currency was unlikely to change in the near future, hitting energy and commodity prices and related shares.

With the price of copper and other metals sliding, Anglo American, Antofagasta, BHP Billiton, Lonmin, Rio Tinto and Vedanta Resources fell between 1.6 and 4.5 percent.

Among oil stocks, Total, ENI, BP and Royal Dutch Shell fell between 1 and 1.6 percent, as crude prices slipped below $71 a barrel, before a slight recovery.

"There's not a whole lot going on," said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin. "We've had a strong rally, and we're now in the seasonally weaker months. But I can see shares moving higher by the year-end."

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 were between 1.7 and 2 percent lower.

Among banks, Banco Santander, Credit Suisse, Deutsche Bank, HSBC, Societe Generale and UBS fell between 1.2 and 2.5 percent.

HOLCIM FALLS

Switzerland's Holcim fell 1.8 percent after the world's second-largest cement maker said it would buy the Australian operations of Mexico's Cemex for $1.64 billion and that it was planning a capital increase to raise the funds.

Shares in Air France-KLM fell 4.3 percent after Citigroup cut its rating on the stock to "hold" from "buy".

Citigroup also increased its forecast for a first-quarter operating loss for Air France to 89 million euros from 1 million euros, down from a profit of 234 million euros a year ago.

Bayer dropped 3.8 percent after the chief executive of its pharmaceutical unit, Bayer Schering Pharma, told a newspaper that price pressure in the industry was intensifying due to the economic crisis.

Chemicals companies BASF and Akzo Nobel, were down 1.7 and 2 percent, respectively.

In a note, Credit Suisse said its analysis "does not offer a blanket buy for cyclical sectors. There appear to be as many cyclical sectors well priced for recovery as those under-pricing it. Oils, chemicals and capital goods are among the former, with real estate, travel & leisure and software among the latter." World number two truck maker Volvo fell 3.5 percent after saying its truck deliveries in May fell 57 percent from a year earlier as the global downturn weighed on demand for commercial vehicles across its main markets.

In economic news, Switzerland's largest business association, economiesuisse, said GDP would shrink 2.9 percent this year and unemployment rise to 4 percent as recession bites deeper.

Tokyo's Nikkei closed 1 percent lower on Monday as investors sold gains after the index exceeded the 10,000 line last week, though losses were limited as sentiment remains upbeat on hopes for a global economic recovery. (Editing by Will Waterman)

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