* FTSEurofirst 300 falls 0.25 pct, up 2 pct on week
* Spanish, Portuguese stocks hit by nagging debt worries
* U.S. job creation disappoints, unemployment rate falls
By Brian Gorman
LONDON, Jan 7 (Reuters) - European stocks fell slightly on
Friday as worries about the euro zone intensified ahead of debt
auctions next week, and U.S. data showed far fewer jobs were
created in December than forecast.
The FTSEurofirst 300 <> index of top European shares
fell 0.25 percent to close at 1,144.39 points. Over the week,
the index gained 2 percent and is up more than 77 percent from
its lifetime low in March 2009.
The euro zone debt crisis "will surface as an investor
concern this quarter," said Colin McLean, managing director at
SVM Asset Management in Edinburgh. "Portugal will have to access
the stability fund."
Banks to fall included BNP Paribas <BNPP.PA>, Banco
Santander <SAN.MC>, BBVA <BBVA.MC> and Societe Generale
<SOGN.PA>, down between 2.2 and 3 percent.
Sentiment on the sector was also affected by bank shares
leading Wall Street lower on Friday after a court ruling voided
foreclosures on two homes, which may cause sales of other
foreclosed properties to be invalidated. []
Across Europe, Britain's FTSE 100 <> and Germany's DAX
<> fell 0.6 and 0.5 percent respectively. France's CAC40
<> was 1 percent lower, Spain's IBEX35 <> was off 1.5
percent and Portugal's benchmark <> dropped 3 percent.
Portugal, Spain and Italy are next week scheduled to hold
their first bond auctions of the year.
Adding to the gloom, concern is growing about Belgium's
ability to manage its public debt after its latest efforts to
form a government collapsed. []
SAFE BETS
"The rising yields at debt auctions in the euro zone will
continue to spook investors, and it's best to stay away from
peripheral stocks such as Spanish and Portuguese banks until
mid-year when the crisis should ease," said Arnaud Scarpaci,
fund manager at Agilis Gestion, in Paris.
"For now, the safe bets are the main benchmarks such as the
DAX and CAC, and the international exposure, with a little
preference for the CAC because it has been lagging."
U.S. non-farm payrolls rose 103,000, the Labor Department
said on Friday, below economists' expectations for 175,000.
However, overall employment for October and November was
revised to show 70,000 more job gains than reported. The
unemployment rate fell to 9.4 percent in December, the lowest
since May 2009, from 9.8 percent in November. []
Interpretations of the data varied. It had "confounded the
biggest pessimists," said McLean. "If you're looking for the
unemployment rate to drop sharply, it was quite encouraging."
Most mining shares lost ground, with Xstrata <XTA.L>, BHP
Billiton <BLT.L>, Vedanta <VED.L> and Anglo American <AAL.L>
down between 0.9 and 1.8 percent, falling along with metal
prices, hit by a stronger U.S. dollar and talk of tighter
monetary policy in China.
Imperial Tobacco <IMT.L> and British American Tobacco
<BATS.L> fell 1.8 and 2.2 percent respectively as Citigroup cut
ratings for both firms to "hold" from "buy", in a sector review.
Auto shares were among the gainers. Porsche <PSHG_p.DE> rose
5 percent after Credit Suisse added the company to its focus
list. Fiat Industrial <FI.MI>, recently spun out of Fiat
<FIA.MI>, rose 6.1 percent
European equities can "still progress" said McLean. "Money
is still being pumped in. I expect profits growth as companies
improve margins. Valuations are not stretched."
(Additional reporting by Blaise Robinson; Editing by David
Hulmes)
