By Eva Kuehnen
FRANKFURT, May 27 (Reuters) - European shares gave up early
gains and fell to a four-week low on Tuesday as losses in banks
and GlaxoSmithKline <GSK.L> offset gains in Vodafone <VOD.L> and
the impact of acquisition talk in the brewing sector.
By 0921 GMT, the pan-European FTSEurofirst 300 index
<> was down 0.44 percent at 1,313.73 points, its lowest
level since late April, after rising to an intraday high at
1,326.60.
The index fell more than 3 percent last week, and dipped 0.2
percent on Monday when financial markets in the United States
and the UK were closed for public holidays.
Over the past six months, banks have taken large writedowns
as a result of the credit market crisis sparked by a collapse in
the market for U.S. mortgages, and traders said markets were
still edgy.
The DJ Stoxx 600's bank index <.SX7P> was down 0.6 percent.
"There is the rumour of further writedowns in the banking
sector. We don't know anything specific, but the market is
reacting very nervously," a trader said.
Other traders said that there was talk of banks having
funding problems, but did not mention any names.
The latest ECB figures showed that a bank or banks borrowed
538 million euros from the central bank on Monday, which
rekindled fears about the health of the financial system.
Swiss bank UBS <UBSN.VX> was down 1.9 percent after trading
ex-rights and Royal Bank of Scotland <RBS.L> dropped 1.6
percent, ING <ING.AS> fell 1.5 percent and BNP Paribas <BNPP.PA>
dropped 1.4 percent.
GlaxoSmithKline <GSK.L> fell 1 percent after Morgan Stanley
downgraded Europe's biggest drugmaker to "underweight" from
"equal-weight".
A Lehman downgrade weighed on Norwegian fertiliser group
Yara <YAR.OL>, which fell 4.5 percent.
Around Europe, Germany's DAX index <> fell 0.6 percent
percent and France's CAC 40 <> dropped 0.8 percent. Only
the UK's FTSE 100 index <> managed to hold on to earlier
gains and was up 0.1 percent, mainly thanks to gains in
Vodafone.
RIGHT TIMING
Vodafone shares rose 1.2 percent after the world's largest
mobile phone company by revenue said it met full-year forecasts
and announced the exit of Chief Executive Arun Sarin, who will
be replaced by his deputy chief executive and head of the
European business, Vittorio Colao.
"Vittorio Colao has been groomed for this job and the timing
is right to replace Arun Sarin," said David Buik in a note.
On the merger and acquisition front, SABMiller <SAB.L>
soared 6.5 percent following a report in the Financial Times
over the weekend that Belgian brewer InBev <INTB.BR> was not
only working on a $46 billion takeover bid for Anheuser-Busch
<BUD.N> but was also casting an acquisitive eye over SABMiller
should a bid for Anheuser fail.
InBev shares dropped 1.9 percent.
Investors awaited reports on the U.S. housing sector and the
Conference Board's index of consumer sentiment, both due at 1400
GMT, for clues about the health of the world's biggest economy.
(Reporting by Eva Kuehnen; editing by Rory Channing)
