* FTSEurofirst 300 falls 2.8 pct; hits 5-week closing low
* Weaker crude, metals prices pressure commodity stocks
* Anglo American gains on Xstrata seeking merger talks
By Atul Prakash
LONDON, June 22 (Reuters) - European shares hit a five-week
closing low on Monday, with weaker crude oil and metals prices
pressuring commodity stocks and a World Bank report on the state
of the global economy dampening market sentiment.
The FTSEurofirst 300 <> index of top European shares
ended 2.8 percent lower at 837.22 points -- the lowest closing
level since mid-May and the biggest one-day decline in more than
two months. But the index, which slumped 45 percent in 2008, has
jumped 30 percent since touching a lifetime low in early March.
Energy stocks were among top decliners as oil prices <CLc1>
fell about 4 percent. BP <BP.L>, Royal Dutch Shell <RDSb.L>, BG
Group <BG.L>, Tullow Oil <TLW.L>, Repsol <REP.MC>, Total
<TOTF.PA> and StatoilHydro <STL.OL> shed 3.2-7.8 percent.
Banking stocks also suffered as investors became more
cautious about the strength of any economic recovery. Barclays
<BARC.L>, Royal Bank of Scotland <RBS.L>, Societe Generale
<SOGN.PA>, Natixis <CNAT.PA> and Commerzbank <CBKG.DE> fell
3.4-7.6 percent.
Market sentiment got a hit after the World Bank warned that
prospects for the global economy remained "unusually uncertain"
despite recent signs of an improvement in parts of the world,
and it cut its 2009 growth forecasts for most economies.
[]
"The World Bank's forecast is certainly playing a role.
People were becoming perhaps a bit too complacent that most of
the difficulties with the financial crisis were behind us. I see
some cautious forces here and there," said Luc Van Hecka, chief
economist at KBC Securities.
"I do not believe that we are in again for a steep
correction, but the market is expected to remain volatile in the
near term," he added.
Across Europe, the FTSE 100 index <>, Germany's DAX
<> and France's CAC 40 <> were 2.6-3 percent lower.
MINERS SLIP, BUT ANGLO AMERICAN UP
Miners also lost ground as copper prices fell 3.8 percent,
aluminium slipped more than 5 percent and nickel declined 3.3
percent as demand worries resurfaced.
BHP Billiton <BLT.L>, Antofagasta <ANTO.L>, Lonmin <LMI.L>,
Rio Tinto <RIO.L> and Eurasian Natural Resources <ENRC.L> fell
3.9-8.2 percent.
But Anglo American <AAL.L> gained 4.6 percent after Xstrata
<XTA.L> said it wanted talks with the group about a proposed
merger of equals worth about $68 billion, seeking increased
scale and cost synergies. []
Analysts said that it might be good for the market to take a
breather after an impressive rally since early March and others
advised caution.
"The depth of the recession is still apparent. This is a
large decline in output, driven largely by sharp declines in
capital spending and aggressive reductions in inventories," said
Darren Winder, head of macro and strategy research at Cazenove.
But the market also witnessed some positive data. German
business sentiment rose to a seven-month high in June although
analysts said plenty of risks remained given that expectations
fuelled the rise in sentiment. []
German industrial conglomerate Siemens <SIEGn.DE> said it
expected to win new orders of around 15 billion euros ($20.9
billion), mostly green projects, from economic stimulus
programmes worldwide in the next three business years. Its
shares, however, fell 3.4 percent in line with the market trend.
"There's certainly no shortage of commentators out there who
have for the last few months been calling for more blood-letting
in the market before any recovery can finally take hold," said
David Fineberg, chief dealer at CMC Markets.
"And with the fundamentals remaining relatively thin on the
ground for the time being it's certainly not beyond doubt that
the bears could come marching back in."
(Additional reporting by Joanne Frearson; Editing by Greg
Mahlich)
