* FTSEurofirst 300 down 1.9 pct
* Sentiment hit by US growth forecast cut, S&P move on UK
* Commodity stocks fall sharply
By Sitaraman Shankar
LONDON, May 21 (Reuters) - European shares fell early on
Thursday to snap a five-day winning run after the United States
deflated hopes of an early economic recovery by cutting growth
forecasts and Standard & Poor's cut its outlook on the United
Kingdom.
At 0846 GMT, the FTSEurofirst 300 <> index of top
European shares was down 1.9 percent at 859.28 points. The
benchmark has rallied 33 percent from a lifetime low hit on
March 9.
On Wednesday, the United States cut its forecasts for the
next three years, forecasting sharper shrinkage of the economy
this year than it did in January.
"There are concerns finally coming through about where the
underlying growth is going to come from," said Justin Urquhart
Stewart, investment director at Seven Investment Management.
"We need a growing level of demand. There's a certain amount
of restocking happening, and unfortunately the market has been
taking that as a sign of a recovery, which it is not," he said.
Adding to investor nerves, Standard & Poor's cut its outlook
on the United Kingdom to negative from stable, saying the
country's debt burden may approach 100 percent of gross domestic
product and stay at that level in the medium term.
Miners were broadly weaker, with BHP Billiton <BLT.L>, Rio
Tinto <RIO.L> and Anglo American <AAL.L> down 1.6-5.6 percent as
copper fell 2.2 percent, while heavyweight oil shares BP <BP.L>,
Shell <RDSa.AS> and Total <TOTF.PA> lost 1.5-2 percent as oil
took a breather below $62 a barrel.
Steelmaker ArcelorMittal <ISPA.AS> was a prominent faller,
losing 4.9 percent after Moody's cut its rating to the lowest
investment grade, citing concerns over the effect weak steel
markets will have on the company's credit profile.
Across Europe, Britain's FTSE <> was down 2.4 percent,
Germany's DAX <> down 1.8 percent and France's CAC <>
down 1.8 percent.
MIXED DATA
European shares fell 45 percent in 2008, punctured by a
credit market crisis that forced governments to bail out banks
and tipped major economies into recession.
Since March 9, however, shares have risen sharply, driven by
hopes that the downturn will not be as deep and prolonged as
originally feared. Banks and commodity stocks led the recovery,
and many big company results beat forecasts, though analysts
have been cutting estimates ahead of the announcements.
Macro data has been broadly stronger, and on Thursday,
surveys showed that the euro zone's services and manufacturing
sectors contracted less than expected in May as firms saw the
pace of decline in new orders ease
Markit's Eurozone Flash Services Purchasing Managers Index
rose to 44.7 in May from 43.8 last month, beating the consensus
estimate of 44.5. That was the third month in a row it picked up
and took it to highest level since October.
However, markets focused on the U.S. figures and the S&P
outlook cut for the United Kingdom.
"It underlines we will get further weakness -- we have to
run through the cycle. Any recession led by bank weakness is
going to be double a normal recession," said Urquhart Stewart.
(Editing by Simon Jessop)
