(Corrects "fades" to "ends" in headline and first paragraph)
* FTSEurofirst 300 down 0.3 percent
* Banks fall, no respite from credit fears
* Crude oil at $138; US CPI in focus
By Amanda Cooper
LONDON, July 16 (Reuters) - European shares slipped on
Wednesday after an early rally in banks ended and analysts
warned persistent concern over the economy and the corporate
sector would likely keep the broader market under pressure.
Banks initially gained but quickly surrendered ground. UBS
<UBSN.VX>, BNP Paribas <BNPP.PA> and Societe Generale <SOGN.PA>
were down between 1 and 2 percent.
Royal Bank of Scotland <RBS.L> fell by 7.2 percent, while
Banco Santander <SAN.MC> lost 1.7 percent and Barclays <BARC.L>
shed 4.1 percent.
Natixis <CNAT.PA> tumbled 13 percent on a report in French
newspaper Les Echos which said the French bank was mulling a
capital increase and could unveil asset writedowns of more than
1 billion euros when it posts its second-quarter results.
Natixis declined to comment.
The FTSEurofirst 300 index <> of top European shares
was down 0.3 percent at 1,106.42 points by 0828 GMT, having
risen earlier by as much as 0.8 percent.
The index closed down 2.1 percent the day before, having
recovered some losses after falling by as much as 3 percent at
one point.
"Technical bounces might occur but we have seen over the
last couple of weeks there have been a lot of invitations to do
that, the market did not really take a cue from that and so I
would not be too optimistic that this will be a really big
relief rally," said Gerhard Schwarz, head of global equity
strategy at UniCredit.
"The outlook for the financial space remains bleak. The
situation is certainly still very much stretched and we have
seen that there is no quick fix for that."
The DJ Stoxx index of European banking shares was last down
0.4 percent, having fallen by more than 3 percent on Tuesday as
concern mounted that the U.S. rescue plan for mortgage finance
companies Freddie Mac <FRE.N> and Fannie Mae <FNM.N> would not
solve the problems of the wider financial system.
Shares in Freddie Mac and Fannie Mae have fallen by more
than 60 percent this month alone.
MORE US SUPPORT
On Tuesday, U.S. securities regulators issued an emergency
rule to limit certain types of short-selling in major financial
firms including Freddie Mac and Fannie Mae. In Frankfurt,
Freddie Mac <FRE.F> was up 2.6 percent and Fannie Mae <FNM.F>
was down 6.3 percent.
The FTSEurofirst 300 has been entrenched in a bear market
since the start of this year and is now more than 30 percent
below last July's 6-1/2 year highs.
U.S. consumer inflation data at 1230 GMT for June should
highlight how much room the Federal Reserve has to tweak
monetary policy. Fed Chairman Ben Bernanke also testifies for a
second day on monetary policy, this time before the House
Financial Services Committee.
Interbank money market strains show no signs of easing, as
concern about the global financial system, particularly in the
United States, intensify.
"In a panicky environment such as prevailed yesterday, it is
easy to get carried away with dire prognostications and suggest
that `the end of the world' is nigh," Nomura analysts said in a
note.
"In reality though we are simply experiencing a re-run of
prior credit episodes and while it may have further to run, it
is highly debatable whether this actually presents a systemic
risk," they said.
Technology stocks in Europe fell after Dutch chip equipment
maker ASML <ASML.AS> said orders recovered from a first-quarter
slump but warned full-year sales could fall more than previously
expected, stripping more than 12 percent off its shares.
Shares in Nokia <NOK1V.HE> were down 1.2 percent, while ST
Microelectronics <STM.PA> were down 0.1 percent.
Intel Corp <INTC.O> on Tuesday beat Wall Street expectations
with its second-quarter earnings and gave a revenue forecast
that topped expectations, pushing its shares up by 2.4 percent
in U.S. after-hours trade. In Frankfurt, Intel shares were
trading up 1.3 percent.
French high-speed train and industrial power plant group
Alstom <ALSO.PA> rose 5 percent after quarterly sales met
analysts' forecasts and it confirmed its operating margin
target.
Lower crude oil prices <CLc1>, at around $138 a barrel, have
given some support to global equities, helping to soothe some of
the deep concern about burgeoning stagflation.
Energy shares were mixed, with StatoilHydro <STL.OL> rising
1.6 percent, while BP <BP.L>, Total <TOTF.PA> and Royal Dutch
Shell <RDSa.AS> were trading between flat and down 0.4 percent.
(Editing by Erica Billingham)
