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German nuclear shutdown weighs on Europe shares

Published 05/30/2011, 12:24 PM
Updated 05/30/2011, 12:28 PM
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* FTSEurofirst 300 index falls 0.2 percent

* Nuclear power plants fall on German shut down

* Euro zone debt concerns weigh on shares

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

By Joanne Frearson

LONDON, May 30 (Reuters) - European shares closed lower on Monday and are on track to end the month down as concerns over the euro zone debt situation weighed, with volumes thin as both U.S. and UK markets were closed for a public holiday.

German nuclear power plant operators RWE and E.ON fell 1.7 percent and 2.3 percent after Germany said it would close all its nuclear reactors by 2022. [ID:nLDE74T00A]

The pan-European FTSEurofirst 300 <.FTEU3> index of top shares closed down 0.2 percent at 1,132.71 points, with the index volume at only 57.8 percent of its 90-day average.

This benchmark index is on track to end the month down around 2 percent on investor concerns about the possibility of a Greek debt restructuring and contagion fears to other debt laden countries.

European Union officials said they were working on a second bailout package for the country, while European Central Bank board member Lorenzo Bini Smaghi warned in a media report that a Greek debt restructuring would be like a "death penalty". [ID:nLDE74S0K3]

"There is still a focus on Greece ... and the worry about default. Investors are waiting to see what will happen next," said Markus Huber, senior trader at ETX Capital.

Despite the concerns about the euro-zone debt crisis, Societe Generale's cross-asset research team suggest going long on the Euro STOXX 50 <.STOXX50E> index to benefit from an attractive dividend yield.

"Much of the bad news is already priced in for the European equity markets, and Euro STOXX dividend yield of 4.3 percent is supportive," they wrote in a note.

RENEWABLES GAIN

Looking at the upside, renewable energy companies got a boost following the German government decision to shut nuclear reactors.

SolarWorld , SMA Solar , Nordex , Q-Cells , Phoenix Solar , Renewable Energy Corp and Vestas were 2.7 to 13.3 percent higher.

On the downside Commerzbank slipped 2.9 percent as brokers cited a JP Morgan price target cut. (additional reporting by Blaise Robinson; Editing by Will Waterman)

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