By Blaise Robinson
PARIS, May 19 (Reuters) - European stocks were slightly down
in early trade on Monday, breaking a three-day winning run as
weakness in the banking sector eclipsed buoyant commodity shares
that benefited from high crude and metal prices.
At 0900 GMT, the FTSEurofirst 300 <> index of top
European shares was down 0.1 percent at 1,363.58 points.
Banks were the heaviest negative weight on the index on
Monday, with UK lender HBOS <HBOS.L> down 1.9 percent, Royal
Bank of Scotland <RBS.L> down 1.5 percent and UBS <UBSN.VX> down
0.9 percent.
Banking stocks have been hit over the past year by fears
over the impact of a meltdown in the risky U.S. subprime
mortgage market that has forced many banks to unveil massive
asset writedowns and emergency capital increases.
The DJ Stoxx banking index <.SX7P>, one of the worst
performing sectors in Europe so far this year, has lost 16
percent year to date.
German online mortgage financier Interhyp <IYPGn.DE> surged
37 percent after a unit of Dutch financial services group ING
<ING.AS> offered to buy Interhyp for 64 euros per share.
Energy stocks were on the rise as oil traded just shy of
$126 a barrel. BP <BP.L> gained 0.4 percent, Royal Dutch Shell
<RDSa.L> rose 1 percent, Total <TOTF.PA> tacked on 0.7 percent
and Repsol <REP.MC> advanced 0.5 percent.
"The market is holding on to gains we have seen over the
past week," said Achim Matzke, European stock indexes analyst at
Commerzbank, in Frankfurt.
"Strong commodities are supporting sectors such as the basic
resources sector, also lifted by the M&A fantasy surrounding Rio
Tinto <RIO.L> and BHP Billiton <BLT.L>," he said.
Miners gained ground, with Xstrata <XTA.L> up 1.2 percent,
Antofagasta <ANTO.L> up 1.3 percent and Anglo American <AAL.L>
up 2.3 percent.
Kazakhmys <KAZ.L> surged 6 percent. Credit Suisse added the
stock to its "Europe Focus" list and raised its price target to
2,700 pence from 2,300 pence, while keeping its "outperform"
rating.
The DJ Stoxx basic resources index <.SXPP> has climbed about
18 percent so far this year, outperforming the FTSEurofirst 300
index, which is down 9.3 percent so far in 2008.
British Airways <BAY.L> dropped 5 percent after downgrades
from Deutsche Bank and ABN AMRO and on high oil prices.
German truckmaker MAN AG <MANG.DE> rose 3 percent after
Goldman Sachs raised its price target on the stock to 132 euros
from 90 euros, according to dealers.
Fertiliser maker K+S <SDFG.DE>, which has outperformed the
broader market so much in recent months on the back of higher
potash prices that it is now a strong candidate to join
Frankfurt's blue-chip DAX index <>, gained 3 percent after
positive analyst notes from two banks.
The session will be quiet on the macroeconomic front, with
only the U.S. leading indicator, expected at 1400 GMT.
Around Europe, Germany's DAX index <> was up 0.3
percent, UK's FTSE 100 index <> up 0.2 percent and France's
CAC 40 <> up 0.1 percent.
(editing by Elizabeth Fullerton)
