RPT-Europe equities edge lower; commodity shares weigh

04/08/2009 00:00 AST

European equities inched lower on Tuesday after hitting a nine-month high in the previous session, with investors pausing for breath after an impressive rally that saw a key index surging 17 percent in three weeks.

Weaker crude oil CLc1 and metals prices put pressure on commodities stocks, while financial shares traded mixed.

At 0709 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.1 percent at 940.75 points. But the index, which slumped 45 percent in 2008, is still up 46 percent since falling to a lifetime low in early March.

"If you run up so fast and so far, its quite natural that you have some profit taking," Luc Van Hecka, chief economist at KBC Securities, said.

"But the overall trend is certainly positive and the market is of the opinion that the worst is over. It is responding quite logically to the fact that earnings have generally been better than expected," he added.

Energy stocks tracked crude oil prices CLc1, which fell 0.7 percent. BP (BP.L), Royal Dutch Shell (RDSb.L), BG Group (BG.L), Tullow Oil (TLW.L), Repsol (REP.MC) and Total (TOTF.PA) shed between 0.2 and 1 percent.

Miner Xstrata (XTA.L) was down 1.3 percent after posting a sharp drop in profit as a result of weak metals prices and warning that hopes of a quick recovery may be premature.

Among banks, Asia-focused Standard Chartered (STAN.L) fell 3.4 percent. It unveiled a surprise $1.6 billion equity fundraising, but reported a better than expected 10 percent increase in its half-year profit. [ID:nL4317381]

UBS (UBSN.VX) was up 0.6 percent. The bank said it remained cautious about its prospects after client withdrawals spurred by protracted U.S. tax litigation dragged the Swiss bank into another big quarterly loss on Tuesday. [ID:nL3704235]

Across Europe, UKs FTSE 100 index .FTSE, Germanys DAX and Frances CAC 40 .FCHI were down 0.2-0.4 percent.

Reuters