European shares fell on Monday, snapping six days of gains, as weaker banks and energy shares outpaced positive food producers, while a US-China trade row also hurt sentiment. The pan-European FTSEurofirst 300 index of top shares closed down 0.3 percent at 990.95 points after hitting its highest close in 11 months on Friday.
The index is up 19 percent this year and has jumped 53 percent since hitting a floor in March, but is still down nearly 15 percent from its level in mid-September 2008 before the collapse of Lehman Brothers, once the fourth-largest US investment bank. "The markets might jump to the conclusion that this is a protectionist measure.
But, I suspect the markets are just looking for an excuse to take some profits," said Mike Lenhoff, strategist at Brewin Dolphin, referring to a move by the US administration to impose special duties on Chinese tyre imports. "The markets are looking for a breather and it is nothing more than that. It's just another ordinary day on the market," said Lenhoff. Banks featured among the worst performers. BNP Paribas, Deutsche Bank and Societe Generale were down 0.9-2.4 percent.
Energy stocks were lower after crude slipped back towards $68 a barrel. BG Group, Royal Dutch Shell and Tullow Oil were down 0.9-2.3 percent. Miners were lower as metal prices retreated. Copper was down 1.1 percent, aluminium was 0.8 percent lower, and nickel fell 1.4 percent. Antofagasta, BHP Billiton, Eurasian Natural Resources Corporation and Rio Tinto were 0.5-3.1 percent lower.
"There is a general feeling that the market is quite overextended and we are extremely overbought. I think we are very close to the end of this very big move and the next couple of months will be very difficult," said Philippe Gijsels, senior equity strategist at Fortis Bank, in Brussels. On the upside, food producers were among the highest movers, with British bid target Cadbury gaining 1.4 percent.
Cadbury is set to beef up its defence against Kraft this week as chief executive Todd Stitzer addresses investors and it ponders an early third-quarter update, analysts and fund managers said. Defensive stocks were also in favour. Drugmakers GlaxoSmithKline and Roche both rose 0.6 percent. Data also failed to support the market. Euro zone industrial output fell in July and employment dropped again in the second quarter, pointing to continued weakness in the economy despite signs that eurozone recession may be ending.