* FTSEurofirst 300 .FTEU3 falls 1.4 pct
* Miners, oils down; crude, metals fall as dollar gains
* Airlines fall on ash cloud worries, Ryanair outlook
* For up-to-the-minute market news, click on [STXNEWS/EU]
By Brian Gorman
LONDON, May 23 (Reuters) - European shares fell on Monday on renewed worries about the euro zone's peripheral debt crisis, as Greece's credit ratings were cut further into "junk" territory and Italy's rating outlook was cut to negative.
Miners were among the losers as the price of copper and other metals fell as the dollar strengthened. Anglo American (AAL.L), BHP Billiton (BLT.L) and Rio Tinto (RIO.L) fell between 2.6 and 4.2 percent.
At 0855 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 1.4 percent at 1,120.84 points, hitting its lowest in more than a month, and dipping below the 50-day moving average.
Standard & Poor's cut its rating outlook for Italy to negative from stable, citing weak growth prospects and increased risks it would fail to slash its debt mountain. Fitch Ratings on Friday downgraded Greece's credit rating to B-plus and put the country on rating watch negative. [ID:nLDE74K08M]
"It's more than Greece now. This is more a reflection of the inability of the EU to sort out anything, and that makes people worry beyond Greece," said Lothar Mentel, chief investment officer at Octopus Investments, which manages $4 billion.
For equities to pick up, Mentel said, "The EU would need to come forward with something clever, instead of just buying time. Or we would need to see the decline in commodity prices feed through to the real economy quite quickly, and I don't expect that to happen before the end of the summer."
The airline sector fell as an eruption by Iceland's most active volcano was set to keep the island's main airport shut on Monday, while other European nations watched for any disruption to their air routes from a towering plume of smoke and ash.
Low-cost airline Ryanair (RYA.I) fell 4.2 percent after it said high fuel costs and a lack of growth in capacity would mean flat earnings in the coming year.
Other fallers in the sector included Air France (AIRF.PA), easyJet (EZJ.L), International Airlines Group (ICAG.L) and Lufthansa (LHAG.DE), down between 2.8 and 5.3 percent. A fall in crude oil CLc1 prices, usually favourable for airlines, failed to cheer the sector.
Energy companies BP (BP.L), Royal Dutch Shell (RDSa.L) and Statoil (STL.OL) fell between 0.9 and 1 percent.
The heavyweight banking sector .SX7P was also a major drag on the index. France's Credit Agricole (CAGR.PA), one of the most exposed to Greece's debt-stricken economy, fell 2.2 percent after seeing its credit rating cut on Friday by Standard & Poor's.
Commerzbank (CBKG.DE) fell 2.1 percent after Germany's second biggest lender announced a larger-than-expected 45 percent discount on a sale of new shares.
Across Europe, Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC40 .FCHI fell between 1.6 and 1.8 percent.
The Thomson Reuters Peripheral Eurozone Countries Index .TRXFLDPIPU was down 3.3 percent.
BLEAK MACRO PICTURE
Other macroeconomic data intensified worries for investors on Monday, adding to downbeat U.S. indicators last week.
Germany's private sector grew this month at its slowest pace since October, in a fresh sign Europe's largest economy is cooling from a surge in the first quarter. The Euro zone's service sector slowed more than expected, according to the latest Purchasing Managers' Index (PMI). China's factory expansion slowed further in May. [ID:nSLAKGE7U5] [ID:nB9E7GJ006]
"The market is beginning to extrapolate some of the PMIs and construe it as a failure in the cycle," said Philip Isherwood, European equities strategist at Evolution Securities. "Investors will look at (U.S.) non-farm payrolls, for evidence that the economy is still expanding."
The pan-European index is roughly in the middle of a range defined by its 2011 high in mid-February and its mid-March low. Octopus Investments' Mentel said European shares would move higher by year-end, but "on a relative basis, I prefer U.S. equities". (Editing by Will Waterman)
* FTSEurofirst 300 .FTEU3 falls 1.4 pct
* Miners, oils down; crude, metals fall as dollar gains
* Airlines fall on ash cloud worries, Ryanair outlook
* For up-to-the-minute market news, click on [STXNEWS/EU]
By Brian Gorman
LONDON, May 23 (Reuters) - European shares fell on Monday on renewed worries about the euro zone's peripheral debt crisis, as Greece's credit ratings were cut further into "junk" territory and Italy's rating outlook was cut to negative.
Miners were among the losers as the price of copper and other metals fell as the dollar strengthened. Anglo American (AAL.L), BHP Billiton (BLT.L) and Rio Tinto (RIO.L) fell between 2.6 and 4.2 percent.
At 0855 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 1.4 percent at 1,120.84 points, hitting its lowest in more than a month, and dipping below the 50-day moving average.
Standard & Poor's cut its rating outlook for Italy to negative from stable, citing weak growth prospects and increased risks it would fail to slash its debt mountain. Fitch Ratings on Friday downgraded Greece's credit rating to B-plus and put the country on rating watch negative. [ID:nLDE74K08M]
"It's more than Greece now. This is more a reflection of the inability of the EU to sort out anything, and that makes people worry beyond Greece," said Lothar Mentel, chief investment officer at Octopus Investments, which manages $4 billion.
For equities to pick up, Mentel said, "The EU would need to come forward with something clever, instead of just buying time. Or we would need to see the decline in commodity prices feed through to the real economy quite quickly, and I don't expect that to happen before the end of the summer."
The airline sector fell as an eruption by Iceland's most active volcano was set to keep the island's main airport shut on Monday, while other European nations watched for any disruption to their air routes from a towering plume of smoke and ash.
Low-cost airline Ryanair (RYA.I) fell 4.2 percent after it said high fuel costs and a lack of growth in capacity would mean flat earnings in the coming year.
Other fallers in the sector included Air France (AIRF.PA), easyJet (EZJ.L), International Airlines Group (ICAG.L) and Lufthansa (LHAG.DE), down between 2.8 and 5.3 percent. A fall in crude oil CLc1 prices, usually favourable for airlines, failed to cheer the sector.
Energy companies BP (BP.L), Royal Dutch Shell (RDSa.L) and Statoil (STL.OL) fell between 0.9 and 1 percent.
The heavyweight banking sector .SX7P was also a major drag on the index. France's Credit Agricole (CAGR.PA), one of the most exposed to Greece's debt-stricken economy, fell 2.2 percent after seeing its credit rating cut on Friday by Standard & Poor's.
Commerzbank (CBKG.DE) fell 2.1 percent after Germany's second biggest lender announced a larger-than-expected 45 percent discount on a sale of new shares.
Across Europe, Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC40 .FCHI fell between 1.6 and 1.8 percent.
The Thomson Reuters Peripheral Eurozone Countries Index .TRXFLDPIPU was down 3.3 percent.
BLEAK MACRO PICTURE
Other macroeconomic data intensified worries for investors on Monday, adding to downbeat U.S. indicators last week.
Germany's private sector grew this month at its slowest pace since October, in a fresh sign Europe's largest economy is cooling from a surge in the first quarter. The Euro zone's service sector slowed more than expected, according to the latest Purchasing Managers' Index (PMI). China's factory expansion slowed further in May. [ID:nSLAKGE7U5] [ID:nB9E7GJ006]
"The market is beginning to extrapolate some of the PMIs and construe it as a failure in the cycle," said Philip Isherwood, European equities strategist at Evolution Securities. "Investors will look at (U.S.) non-farm payrolls, for evidence that the economy is still expanding."
The pan-European index is roughly in the middle of a range defined by its 2011 high in mid-February and its mid-March low. Octopus Investments' Mentel said European shares would move higher by year-end, but "on a relative basis, I prefer U.S. equities". (Editing by Will Waterman)
* FTSEurofirst 300 .FTEU3 falls 1.4 pct
* Miners, oils down; crude, metals fall as dollar gains
* Airlines fall on ash cloud worries, Ryanair outlook
* For up-to-the-minute market news, click on [STXNEWS/EU]
By Brian Gorman
LONDON, May 23 (Reuters) - European shares fell on Monday on renewed worries about the euro zone's peripheral debt crisis, as Greece's credit ratings were cut further into "junk" territory and Italy's rating outlook was cut to negative.
Miners were among the losers as the price of copper and other metals fell as the dollar strengthened. Anglo American (AAL.L), BHP Billiton (BLT.L) and Rio Tinto (RIO.L) fell between 2.6 and 4.2 percent.
At 0855 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 1.4 percent at 1,120.84 points, hitting its lowest in more than a month, and dipping below the 50-day moving average.
Standard & Poor's cut its rating outlook for Italy to negative from stable, citing weak growth prospects and increased risks it would fail to slash its debt mountain. Fitch Ratings on Friday downgraded Greece's credit rating to B-plus and put the country on rating watch negative. [ID:nLDE74K08M]
"It's more than Greece now. This is more a reflection of the inability of the EU to sort out anything, and that makes people worry beyond Greece," said Lothar Mentel, chief investment officer at Octopus Investments, which manages $4 billion.
For equities to pick up, Mentel said, "The EU would need to come forward with something clever, instead of just buying time. Or we would need to see the decline in commodity prices feed through to the real economy quite quickly, and I don't expect that to happen before the end of the summer."
The airline sector fell as an eruption by Iceland's most active volcano was set to keep the island's main airport shut on Monday, while other European nations watched for any disruption to their air routes from a towering plume of smoke and ash.
Low-cost airline Ryanair (RYA.I) fell 4.2 percent after it said high fuel costs and a lack of growth in capacity would mean flat earnings in the coming year.
Other fallers in the sector included Air France (AIRF.PA), easyJet (EZJ.L), International Airlines Group (ICAG.L) and Lufthansa (LHAG.DE), down between 2.8 and 5.3 percent. A fall in crude oil CLc1 prices, usually favourable for airlines, failed to cheer the sector.
Energy companies BP (BP.L), Royal Dutch Shell (RDSa.L) and Statoil (STL.OL) fell between 0.9 and 1 percent.
The heavyweight banking sector .SX7P was also a major drag on the index. France's Credit Agricole (CAGR.PA), one of the most exposed to Greece's debt-stricken economy, fell 2.2 percent after seeing its credit rating cut on Friday by Standard & Poor's.
Commerzbank (CBKG.DE) fell 2.1 percent after Germany's second biggest lender announced a larger-than-expected 45 percent discount on a sale of new shares.
Across Europe, Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC40 .FCHI fell between 1.6 and 1.8 percent.
The Thomson Reuters Peripheral Eurozone Countries Index .TRXFLDPIPU was down 3.3 percent.
BLEAK MACRO PICTURE
Other macroeconomic data intensified worries for investors on Monday, adding to downbeat U.S. indicators last week.
Germany's private sector grew this month at its slowest pace since October, in a fresh sign Europe's largest economy is cooling from a surge in the first quarter. The Euro zone's service sector slowed more than expected, according to the latest Purchasing Managers' Index (PMI). China's factory expansion slowed further in May. [ID:nSLAKGE7U5] [ID:nB9E7GJ006]
"The market is beginning to extrapolate some of the PMIs and construe it as a failure in the cycle," said Philip Isherwood, European equities strategist at Evolution Securities. "Investors will look at (U.S.) non-farm payrolls, for evidence that the economy is still expanding."
The pan-European index is roughly in the middle of a range defined by its 2011 high in mid-February and its mid-March low. Octopus Investments' Mentel said European shares would move higher by year-end, but "on a relative basis, I prefer U.S. equities". (Editing by Will Waterman)
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