* FTSEurofirst 300 ends down after Monday's 15-month high
* China bank measures, Alcoa results hit sentiment
* Commodity, financial shares among top decliners
By Atul Prakash
LONDON, Jan 12 (Reuters) - European equities retreated from
a 15-month high to finish lower on Tuesday as a disappointing
start of the earnings season in the United States and China's
surprise move to raise bank reserve requirements hurt sentiment.
The FTSEurofirst 300 <> index of top European shares
closed 0.9 percent lower at 1,053.93 points after rising to its
highest in more than 15 months in the previous session. The
index rose 26 percent in 2009 and has surged 63 percent since
hitting a record low in March last year.
Commodity shares were among the top decliners, with BHP
Billiton <BLT.L>, Antofagasta <ANTO.L>, Rio Tinto <RIO.L>,
Xstrata <XTA.L> and ENRC <ENRC.L> down 1.8 to 3.3 percent, on
concerns that Chinese monetary tightening could take some of the
fizz out of the global economic recovery. []
The world's third-largest economy took its strongest step
towards tightening monetary policy, surprising investors with a
rise in banks' required reserves by 50 basis points, making
China one of the largest economies to start rolling back the
emergency policies used to combat the crisis fallout.
China helped pull the global economy out of recession last
year, with its double-digit growth giving a lift to Asia and
countries that have been able to feed its voracious appetite for
commodities from iron ore to metals and crude oil.
"If you have a high growth and low interest rate scenario,
it's almost an open invitation for an asset bubble. It's a wise
thing that China is trying to deal with that before it becomes
impossible to manage," said Luc Van Hecka, chief economist at
KBC Securities.
Hecka said European shares also came under pressure
following Alcoa Inc's <AA.N> worse-than-expected quarterly
results after market close on Monday. Alcoa was the first Dow
Jones industrial average <> component to announce results
"If expectations are very high, then there is a probability
that you will get some disappointments along the way. But it's
too early to say something about earnings," Hecka said.
FINANCIALS UNDER PRESSURE
Banks lost ground, with Standard Chartered <STAN.L>, Societe
Generale <SOGN.PA>, Credit Agricole <CAGR.PA>, UBS <UBSN.VX>,
Commerzbank <CBKG.DE>, National Bank of Greece <NBGr.AT> and
Allied Irish Banks <ALBK.I> falling 1 to 9.3 percent.
Bank of Ireland <BKIR.I> fell 6.5 percent. Its shareholders
approved joining Ireland's "bad bank" scheme which it said would
help its efforts to avoid falling fully into state ownership.
In macro-economic news, Britain's economy probably emerged
from its longest recession on record at the end of last year,
figures indicated, though big question marks remain over how
strong or sustained the recovery will be.
Encouraging Christmas sales reports from the British Retail
Consortium and Britain's biggest retailer Tesco <TSCO.L>
suggested consumer confidence was surprisingly strong and house
prices continued to grow in December, albeit at a slower pace.
Tesco shares rose 0.8 percent. []
"On the plus side, Tesco had excellent results," said David
Buik, partner at BGC Partners. "I do believe the only sector
worth supporting in retail is the supermarkets.".
Among individual movers, Cadbury <CBRY.L> shares fell 0.5
percent. The British confectioner made its final case for the
defence against Kraft Foods' <KFT.N> 10.5 billion-pound ($17
billion) takeover bid on Tuesday, but a raised offer was still
expected to win over shareholders in the company.
Analysts said Cadbury's announcement of robust 2009 results
and the promise of further growth was positive for its valuation
but Kraft only needed to make a slightly improved offer over the
next seven days of the bid timetable to succeed. []
Volvo <VOLVb.ST> fell 3.1 percent on what traders said was
market talk of a rights issue after one of the truck firm's
shareholders announced a bond issue to raise cash. The world's
number two truck maker said it would not comment on rumours.
Across Europe, Britain's FTSE 100 index <>, Germany's
DAX <> and France's CAC 40 <> fell 0.7-1.6 percent.
(Additional reporting by Harpreet Bhal; Editing by Rupert
Winchester)
