* Energy stocks rise along with crude oil prices
* Bank shares hit again by fears over the sector's outlook
* Pharma stocks among top gainers; Shire soars after upgrade
By Blaise Robinson
PARIS, June 23 (Reuters) - European stocks ended flat on
Monday, pausing after last week's sharp losses as rising oil
prices lent support to energy shares but banking stocks were hit
by worries over the health of the sector.
Pharmaceutical stocks climbed, led by Shire's <SHP.L> gains
on an upbeat broker note.
The FTSEurofirst 300 <> index of top European shares
closed 0.03 percent higher at 1,222.89 points. The index slipped
3.5 percent last week on concerns over the outlook for banks,
high oil prices and the spectre of interest rate hikes.
Banks featured among the top losers on Monday, with UBS
<UBSN.VX> down 4.4 percent and Credit Agricole <CAGR.PA> down
4.5 percent.
Deutsche Postbank <DPBGn.DE> tumbled 6.2 percent as traders
said the lender, a takeover target, may not fetch an attractive
deal in the face of growing interest in rival Dresdner.
HBOS <HBOS.L> shed 4.3 percent on fears that a big chunk of
the lender's shares will not be taken up during the fundraising
and will be sold in the market.
Adding to the gloom, Goldman Sachs cut its recommendation on
U.S. financial shares to "underweight".
"We have reached support levels," said Francois Chevallier,
strategist at VP Finance in Paris.
"Investors have overreacted. Stock prices are
unrealistically low after last week's sell-off sparked in part
by anticipation of interest rate hikes," he said. "But macro
news out of Europe is not good and signals a strong slowdown
that could force the ECB to postpone any rate hikes."
High inflation has prompted the European Central Bank to
adopt an increasingly hawkish tone over the past few weeks,
raising the prospect of a rate hike as soon as July.
The Federal Reserve is expected to keep U.S. interest rates
steady at 2 percent when it announces its decision on Wednesday.
UK's FTSE 100 index <> added 0.8 percent, bolstered by
gains in energy stocks, as oil prices moved above $137 a barrel
again.
Royal Dutch Shell <RDSa.L> added 1.5 percent and BP <BP.L>
gained 1.8 percent, while France's Total <TOTF.PA> rose 2.1
percent.
Germany's DAX index <> gained 0.2 percent, and
France's CAC 40 <> rose 0.05 percent.
Shire <SHP.L> jumped 5.7 percent after Goldman Sachs raised
its rating on the stock to "buy" from "neutral" and added it to
its pan-European "conviction buy" list.
"We expect share gains to accelerate in second-half 2008
following the launch of Vyvanse in adults," Goldman said in a
note. Vyvanse is a medicine for attention deficit hyperactivity
disorder and Shire's biggest drug hope.
Other pharmaceutical stocks gained ground, with
GlaxoSmithKline <GSK.L> up 2.1 percent and AstraZeneca <AZN.L>
up 3.1 percent.
On the macro-economic front, investors digested data from
the Ifo survey showing that German corporate sentiment weakened
significantly in June, suggesting economic activity in Europe's
largest economy was cooling.
"Reasons for the worse than expected data are the high oil
price and the ECB outlook: if the European Central Bank is
raising interest rates, many investment decisions will at least
be reconsidered -- and that in the context of an increasingly
weaker economic situation," said Thomas Amend at HSBC Trinkaus.
UK property stocks featured among the biggest losers,
falling on price target downgrades from HSBC and a bearish
survey on British house prices from Rightmove.
Land Securities <LAND.L> fell 4.8 percent and Liberty
International <LII.L> shed 2.6 percent.
Among stocks on the rise, Spain's Banco Popular <POP.MC>
added 4.6 percent after a company acting on behalf of a group of
Mexican investors said it wants to buy 20 percent of Popular.
(Additional reporting by Sitaraman Shankar in London; Editing
by Paul Bolding)
