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* FTSEurofirst 300 closes down 0.9 percent
* China's Christmas Day rate rise weighs on market
* Trade thin at just 29 pct of 30-day average
* Autos stocks lead declines
By Simon Jessop
LONDON, Dec 27 (Reuters) - European stocks closed lower in
extremely thin trading on Monday after China's interest rate
rise over the weekend fueled concerns about the outlook for
economic growth.
The FTSEurofirst 300 <> ended down 0.9 percent at
1,137.49, with German carmakers Volkswagen <VOWG.DE> and BMW
<BMWG.DE> the worst hit, both down more than 5.5 percent.
Volumes were thin, however, at just 29 percent of the
index's 30-day average volume, with Britain on holiday until
Wednesday and many institutional trading books closed ahead of
year-end.
The pan-European index has gained 6.6 percent in December
and, in spite of the Monday's hefty fall, is still on track to
record its biggest monthly gain since March.
The Christmas Day news that China would raise interest
rates for the second time in just over two months in an attempt
to cap surging inflation drove the market firmly lower at the
open. For more, see: []
However, "whatever view markets take in the short term,
growth in China will still be well above the norm," said Howard
Wheeldon, an equity strategist at BGC Capital Partners.
"There's a slowing down, but China is not going into a
reverse."
The STOXX Europe 600 Automobiles & Parts index <.SXAP> was
the worst-hit sector, down 3.9 percent on concern the rate hike
could hit demand for cars from consumers in China, a key export
market for many automakers.
Adding to sector woes was last Friday's news Beijing aims
to tackle congestion in China's capital by limiting new-car
registrations. []
"They may do the same in other cities in China, and it will
hurt the German makes like Daimler," said Heino Ruland, a
strategist at Ruland Research, in Frankfurt.
In addition to the falls for BMW and VW, shares in Daimler
<DAIGn.DE> and parts maker Continental AG <CONG.DE> also ended
sharply lower, down 4.6 percent and 4.3 percent, respectively.
Regional index losses could be extended in the coming days,
said a trader at a leading U.S. bank, as many firms in the
STOXX Europe 600 Basic Resources index <.SXPP> are listed in
London and have yet to price in the China rate hike.
"I still think the market may not have fully factored the
rate rise in yet. Investors need to fully digest this, and
there's not been enough commentary released yet," he added.
In the heavyweight banking sector, a combination of the
China rate hike and ongoing sovereign debt woes pushed shares
lower, said Ruland, with peripheral euro zone banks
particularly weak.
Spain's Banco Santander <SAN.MC> and BBVA <BBVA.MC> closed
down 2.9 percent and 2.3 percent, respectively, while Greek
lenders Alpha Bank <ACBr.AT> and National Bank of Greece
<NBGr.AT> were down more than 3.5 percent.
Across Europe, Germany's DAX <> and France's CAC 40
<> ended down 1.2 and 1 percent, respectively, while
Spain's IBEX 35 <> closed down 2.1 percent.
(Additional reporting by Brian Gorman; editing by Dan
Grebler)
