Mining and energy shares among top losers

Eurostoxx 50: 2,917.05 (-25.38) Frankfurt DAX: 7,443.95 (-51.10) Paris CAC: 4,023.29 (-34.79)EUROPEAN SHARE prices mostly ended lower yesterday and analysts said the market could be prone to further declines as a sell-off in commodities on demand concerns prompted investors to shun mining and energy shares.

A rise in the Euro STOXX 50 volatility index, one of Europe’s main barometers of market sentiment,suggested a fall in investors’ appetite for risk, while charts indicated a key stockmarket index might come under more pressure.

The FTSEurofirst 300 index of top European shares closed 0.7 per cent lower at 1,145.07 points after falling to a low of 1,137.26. The index, which advanced in the previous two sessions, is 2.1 per cent higher this year.

Miners bore the brunt of the sell-off, with the STOXX Europe 600 Basic Materials index down 2 per cent, as copper hit a five-month low on concerns of slower economic growth and demand from China and the United States.

China lifted bank reserve requirements to contain inflation despite signs of the economy slowing down, while the US economy struggled to gain momentum early in the second quarter, with retail sales posting their smallest rise in nine months in April. Energy shares were also hit hard, with the sector index falling 1.7 per cent following a sharp drop in oil prices. BG Group declined 1.9 per cent.

Growing concerns over the pace of economic recovery on the back of soft data from the US and China have prompted investors to reduce their exposure to market risk, with worries also over the outlook for inflation and monetary tightening.

Concerns about the euro zone debt crisis remained in the background and analysts said the issue could resurface again. The IMF warned the debt crisis could still spread to core euro zone countries and the emerging economies of eastern Europe.

The Euro STOXX 50, the euro zone’s blue chip index, fell 0.9 per cent to 2,917.05 points. A dark cloud cover formed on its weekly candlestick chart last week suggested a high risk of a further correction in the next few weeks.

Telecom shares fell 0.9 per cent in high volumes. However, softer crude prices helped airlines in anticipation fuel costs will fall. Air France-KLM rose 0.9 per cent, while Lufthansa gained 2.4 per cent. – (Reuters)