* FTSEurofirst 300 falls 0.7 pct from 2-yr highs
* Banks among biggest losers; Natixis tumbles 12.2 pct
* Risk appetite falls; European volatility index surges
By Atul Prakash
LONDON, Nov 10 (Reuters) - European shares fell on Wednesday
from two-year highs, with concerns about euro zone debt problems
resurfacing and banks dragged down by a sharp drop in Natixis
<CNAT.PA> after it missed profit forecasts.
An emergency cash injection to shore up Brazilian bank Banco
PanAmericano <BPNM4.SA> also hurt sentiment as the VDAX-NEW
index <.V1XI>, one of Europe's main barometers of investor
anxiety, surged 9 percent -- its biggest one-day percentage rise
in more than four months.
The FTSEurofirst 300 <> index of top European shares
ended 0.7 percent lower at 1,109.61 points, after rising 0.6
percent on Tuesday to its highest since September 2008. The
index is up 6 percent this year.
"Equity markets had partially ignored the rising tensions
within the euro zone. Today the focus is more on this after one
of the clearing companies increased the margin requirements for
Irish bonds," Tammo Greetfeld, equity strategist at UniCredit,
said.
LCH.Clearnet, which clears Irish government bonds on behalf
of its investment bank clients, said on Tuesday it will increase
the margin required to trade Irish sovereign debt by 15 percent
as of Thursday, highlighting nervousness about the country.
Euro zone peripheral countries such as Ireland and Portugal
have set out plans to cut their budget deficits but are
struggling to convince markets they will work. []
"This risk factor is not going to vanish soon. If tensions
within the euro zone escalate, then equity markets will not be
able to decouple from a deteriorating government bond market,"
Greetfeld said.
BANKS BATTERED
Banks featured among the top losers, with the STOXX Europe
600 banking index <.SX7P> falling 1.8 percent. Fears grew that
some French banks were ill-equipped to face looming tougher
capital requirements after results from Natixis showed the
impact would be worse than some had expected.
Natixis fell 12.2 percent and dragged down larger rival
Credit Agricole <CAGR.PA>, which fell 4.6 percent. The pair are
seen as among the most vulnerable to stricter Basel III capital
requirements in Europe which come into force in 2019.
Credit Agricole said it did not plan to raise capital to
meet Basel requirements as it posted higher-than-forecast
quarterly results. []
Equities have fallen after gaining for weeks before the U.S.
Federal Reserve's decision last week to purchase $600 billion in
Treasury debt to spur a sluggish economy. Since late August, the
FTSEurofirst 300 index has gained about 11 percent.
"There might be a bit of weakness until we get some
resolution about Ireland," said Mark Bon, fund manager at Canada
Life in London. "The market is looking for a Greek solution to
the Irish problems, which would remove uncertainty.
The market ignored encouraging economic numbers and focused
on countries such as Ireland. Data showed initial claims for
U.S. jobless benefits hit a four-month low last week, while the
trade gap narrowed more than expected in September.
Mining stocks slipped after strong gains the previous
session as metals prices retreated on weak Chinese imports and
higher reserve requirements announced by the country.
BHP Billiton <BLT.L>, Antofagasta <ANTO.L> and Eurasian
Natural Resources <ENRC.L> fell 2.4 to 3.8 percent.
Across Europe, the FTSE 100 <>, Germany's DAX <>
and France's CAC 40 <> fell 1 to 1.5 percent. Ireland's
ISEQ <.ISEQ>, Spain's IBEX 35 <> and Italy's MIB <.FTMIB>
slipped 1.7 to 2.4 percent, while the Thomson Reuters Peripheral
Eurozone Countries Index <.TRXFLDPIPU> was down 2.7 percent.
(Additional reporting by Brian Gorman; editing by David
Hulmes)
