* FTSEurofirst 300 index closes 0.1 percent lower
* UBS higher on upbeat statement
* Givaudan falls, dividend less than expected
By Brian Gorman
LONDON, Feb 8 (Reuters) - European shares slipped back from 29-month highs on Tuesday, after China increased interest rates again to fight stubbornly high inflation, raising concerns about economic growth.
Chemical makers featured on the downside. Givaudan slipped 3.5 percent after the flavour and fragrance maker proposed a smaller-than-expected dividend and said high raw materials prices would weigh on margins.
Other stocks to fall included miners Kazakhmys, ENRC, and Vedanta, down between 0.6 and 1.4 percent. However, other miners had cut their losses by the end of the session.
Some upbeat corporate news helped limit losses for key indexes. UBS rose 4.3 percent after saying it expects to win more client money for its wealth management business in 2011 and sees a rebound in the investment banking division.
The pan-European FTSEurofirst 300 index of top shares fell 0.1 percent to close at 1,176.28 points, having hit its highest close since September 2008 in the previous session.
Investors became nervous about the global recovery when China's central bank said its benchmark deposit and lending rates would be raised by 25 basis points.
"The markets have been relying to some extent on emerging markets growing for an elongated period and if that's being called into question, that's a headwind to equity markets," said Richard Batty, investment director at Standard Life Investments.
The European benchmark is up more than 82 percent from its lifetime low of March 2009, with several major economies having emerged from recession, helped by stimuli from governments and central banks worldwide.
Batty, like most other strategists does not anticipate the European Central Bank or Bank of England raising rates in the near tern. The BoE announces will announce a decision on Thursday.
"It's not clear the economy is strong enough," he said.
Across Europe, the FTSE 100 index ended the day 0.7 percent higher, Germany's DAX was up 0.5 percent and France's CAC 40 was up 0.4 percent.
"Markets are overheating and face inflationary pressures," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said.
Since U.S. Federal Reserve Chairman Ben Bernanke raised the prospect in August that the Fed would buy more assets to boost liquidity in the U.S. economy, stock markets have rallied.
"Now countries are taking out liquidity, markets are going to have a much harder time," Gijsels said.
AUTOS RISE
On the upside, carmakers were in demand, with the STOXX Europe 600 Automobiles & Parts jumping 3.3 percent.
German premium carmaker BMW gained 4.7 percent after group unit sales rose in January and it said it expected strong growth to help it reach its 2011 target.
Bullish forecasts from major car firms lifted hopes for the sector, as the likes of Toyota and French parts maker Faurecia set out new goals for 2011 based on strong growth.
Peugeot rose 4.3 percent ahead of results on Wednesday.
Swedbank gained 5.2 percent after the Swedish bank said it would pay out a higher dividend than expected and its quarterly earnings beat expectations.
ArcelorMittal was 2.8 percent higher after the world's largest steelmaker forecast a faster than expected recovery in demand.
Rising raw material costs made a dent in earnings at the end of 2010 for Swedish engineer Alfa Laval, which lost 3.6 percent after forecasting flat demand in the first quarter. (Additional reporting by Joanne Frearson; Editing by Hans Peters)