* FTSEurofirst 300 index falls 0.8 percent
* Insurers hit by Japanese quake
* K+S slips after BASF sale
By Joanne Frearson
LONDON, March 11 (Reuters) - European share prices fell on
Friday to their lowest close in two months after the Japanese
earthquake, with the insurance sector hit the worst.
Also adding to the worries were the continuing crisis in
Libya and political tensions elsewhere in the Middle East as
well as concerns about the euro zone as the bloc's leaders
gathered for a weekend summit to address the debt crisis.
The pan-European FTSEurofirst 300 <> index of top
shares provisionally closed down 0.8 percent at 1,122.53 points
- its lowest close since December 31 2010, with volumes 104.6
percent of its 90-day average.
"There is a rotation going back into defensives, in the
short term I think the market could remain vulnerable," said
Colin McLean, managing director at fund group SVM Asset
Management in Edinburgh, which has about 650 million pounds
($1.1 billion) in assets under management.
"The Japanese earthquake has had a direct impact on the
insurers, but investors are also worried about issues like what
is going to happen with the European (financial) Stability Fund
and whether other countries could get downgraded."
Japan, the third biggest economy in the world, was hit by
its biggest quake on record. []
Insurers were the worst hit, with the STOXX Europe 600
Insurance <.SXIP> down 2.2 percent. French group Scor <SCOR.PA>
lost 5.2 percent, with volumes 748.3 percent of its 90-day
average.
Munich Re <MUVGn.DE>, Swiss Re <RUKN.VX> and Hannover Re
<HNRGn.DE> fell between 3.5 to 5.3 percent, with volumes between
364.4 to 412.7 of their 90-day average.
Meanwhile investors expect the outcome of the euro zone
leaders meeting to support a watered-down version of a
German-French plan to boost competitiveness but not agree to
widen the scope of the rescue fund.
Bond yields in the troubled "peripheral" euro zone countries
remained high despite Portugal announcing additional spending
cuts to to avoid a bailout, with investors worrying it will also
ask for help. []
K+S SLIPS
Looking at individual shares, Germany's K+S <SDFG.DE> fell 6
percent after BASF <BASFn.DE> sold its 10 percent stake in the
potash miner. []
Broker RBS, which has a "buy" rating on BASF said this was
good news for the company as the proceeds would be used to lower
its debt position.
Although intra-day technical indicators for the euro zone's
Euro STOXX 50 index <> were bearish, with the market
still below its 50-day moving average, on a three-month horizon
the picture was more bullish.
The index closed down 0.9 percent at 2,883.84 and Philippe
Delabarre, technical analyst at Trading Central, said this area
would act as "support" following a pushing above the 2,880 level
in January.
Adding to this the relative strength index (RSI) index had
broken down through 30 and was at 24.95. When the RSI approaches
30 it is an indication that the asset may be getting oversold
and therefore likely to become undervalued.
"There is no reason to suggest that the stock market is
going to collapse. The underlying tendency of the market is
still to have net buyers. The net cyclical balance of these
forces of interest rates and growth are still positive," said
Bernard McAlinden, investment strategist at NCB Stockbrokers, in
Dublin.
Europe's broader STOXX 600 index <> currently trades
at 10.9 times expected earnings, below a 10-year average of
13.6, according to Thomson Reuters Datastream data.
Across Europe, the FTSE 100 <> index was down 0.3
percent, Germany's DAX <> slipped 1.2 percent and France's
CAC 40 <> was down 0.9 percent.
(Editing by Greg Mahlich)
