* FTSEurofirst 300 snaps 3-day rally, down 0.5 percent
* Mining, energy shares rise along with commodities
* Roche falls after unveiling bid for U.S. Genentech
By Blaise Robinson
PARIS, July 21 (Reuters) - European stocks retreated in
early trade on Monday, snapping a three-session recovery, but
gains in the mining and energy sectors helped cushion the fall.
Among the biggest losers, Swiss drugmaker Roche <ROG.VX>
shed 3.3 percent after offering to acquire all outstanding
shares in its U.S. partner Genentech Inc <DNA.N> for $43.7
billion. Genentech's shares traded in Frankfurt were up 10
percent.
British lender HBOS <HBOS.L> was also on the down side,
losing 3.4 percent after saying shareholders subscribed for just
8.3 percent of shares in its 4 billion pound ($8 billion) rights
issue, leaving its underwriters to try to sell almost 3.8
billion pounds of stock.
At 0827 GMT, the FTSEurofirst 300 <> index of top
European shares was down 0.5 percent at 1,158.93 points. The
index gained around 3.2 percent last week, rallying after
quarterly results from Citigroup <C.N> and Wells Fargo <WFC.N>
calmed fears over banks' balance sheets.
"There is, hanging over the market, the idea that the real
cyclical companies haven't yet had major profit warnings whereas
we know that the economy is slowing down," said Arthur van
Slooten, strategist at Societe Generale, in Paris.
"There is still a part of the market that is very likely to
at least push its forecast lower," he said.
Mining shares gained ground, rallying along with most base
metal prices. Rio Tinto <RIO.L> added 1.4 percent, BHP Billiton
<BLT.L> rose 2.7 percent and Xstrata <XTA.L> gained 1 percent.
Energy shares climbed as oil recovered from a recent sharp
fall. U.S. crude oil futures <CLc1> were up $1.57 at $130.45 a
barrel, with oil traders keeping an eye on Tropical storm Dolly,
the first storm of the 2008 Atlantic hurricane season that could
disrupt oil production in the Gulf of Mexico.
Total <TOTF.PA> gained 2.3 percent, BP <BP.L> added 1.2
percent and Repsol <REP.MC> rose 0.4 percent.
The recent drop in oil prices has helped equities recover
over the past few sessions, said van Slooten.
"But it's not a clear sky, and one of the risks is that the
drop may prove temporary, notably in view of the hurricane
risks."
Tech and media shares fell after disappointing earnings from
Google <GOOG.L> and Microsoft <MSFT.O>. Infineon <IFXGn.DE>
dropped 0.9 percent, Capgemini <CAPP.PA> fell 1.4 percent, and
Publicis <PUBP.PA> shed 1.6 percent.
Around Europe, Germany's DAX index <> was down 0.6
percent, UK's FTSE 100 index <> down 0.5 percent and
France's CAC 40 <> down 0.4 percent.
Postbank <DPBGn.DE> fell 3.5 percent after the chief
financial officer of the German retail bank's main owner, mail
and logistics group Deutsche Post <DPWGn.DE>, was quoted as
saying Post was in no rush to sell its stake.
"Post seems to have no pressing need to sell Postbank,"
JPMorgan analysts wrote in a research note. Many analysts said
Postbank's share price has contained a significant takeover
premium.
Shares in Dutch publisher Wolters Kluwer <WLSNc.AS> sagged
4.4 percent after the company cut its 2008 revenue growth
outlook.
The FTSEurofirst 300 has lost 23 percent so far this year,
knocked lower by fears over the health of the banking sector as
well as worries over stagflation -- the combination of stagnant
economy and rising inflation.
(Editing by David Cowell)
