* FTSEurofirst 300 falls 1.2 pct, wipes out Friday's gains
* Banks down; UK considers windfall tax on bankers' bonuses
* Risk appetite falls; volatility index jumps 5 percent
* For up-to-the-minute market news, click on []
By Atul Prakash
LONDON, Dec 7 (Reuters) - European shares retreated from a
two-week closing high the previous session, with UK lenders
pressured by the possibility of a tax on bankers' bonuses.
At 0904 GMT, the FTSEurofirst 300 <> index of top
European shares was down 1.2 percent at 1,013.77 points. It
gained 1.1 percent on Friday after data showed U.S. employers
cut far fewer than expected jobs in November.
"The consequences of better-than-expected employment data
are that the interest rates are going to go up. What we saw was
great for the economy, but it's not so great for the stock
market," said Koen De Leus, economist at KBC Securities.
Banks were among the top losers. A UK government source told
Reuters on Friday a windfall tax on banks was one
revenue-raising option being considered by finance minister
Alistair Darling for his pre-budget report on Wednesday.
[]
Standard Chartered <STAN.L>, HSBC <HSBA.L>, Barclays
<BARC.L>, Lloyds <LLOY.L>, Royal Bank of Scotland <RBS.L>, BNP
Paribas <BNPP.PA> and Societe Generale <SOGN.PA> fell 0.4 to 2.7
percent.
Energy stocks also slipped as crude prices <CLc1> fell 0.5
percent. BP <BP.L>, Royal Dutch Shell <RDSa.L>, BG Group <BG.L>,
Tullow Oil <TLW.L>, Repsol <REP.MC>, Total <TOTF.PA> and
StatoilHydro <STL.OL> shed 0.6 to 1.6 percent.
A broad sell-off in the market put pressure on drugmakers.
AstraZeneca <AZN.L>, GlaxoSmithKline <GSK.L>, Merck <MRCG.DE>,
Novo Nordisk <NOVOb.CO>, Roche Holding <ROG.VX>, Sanofi-Aventis
<SASY.PA> and Shire <SHP.L> fell 0.6 to 1.9 percent.
Across Europe, Britain's FTSE 100 index <>, Germany's
DAX <> and France's CAC 40 <> fell 0.8-1.1 percent.
RISK APPETITE FALLS, COMMODS SLIP
Investor appetite for risky assets such as equities fell,
with the VDAX-NEW volatility index <.V1XI> rising 5 percent. The
higher the index, which is based on sell and buy options on
Frankfurt's top-30 stocks <0#.GDAXI>, the lower the market's
desire to take risk.
"The much better than expected non-farms (data) on Friday
didn't give us as much bounce as you would have thought,
indicating how far we have travelled in the last six months and
just how nervous market traders are," said Brian Myers, analyst
at odlmarkets.com.
"The sensitive underbelly to the markets remains intact for
the time being," he said.
Miners slipped as gold <XAU=> fell to its lowest level in
more than a week after setting a record high last week, copper
<MCU3> fell 1.7 percent, aluminium <MAL3> was down 1.2 percent
and zinc <MZN3> fell 3 percent.
Anglo American <AAL.L>, Antofagasta <ANTO.L>, Xstrata
<XTA.L> and Eurasian Natural Resources <ENRC.L> declined 1.2 to
2.3 percent.
BHP Billiton <BLT.L> and Rio Tinto <RIO.L> fell 1.2 percent
and 1.7 percent respectively. BHP and Rio on Saturday signed a
$116 billion iron ore joint venture agreement to combine their
Western Australian iron ore operations. []
The agreement brings together two of the world's three
largest iron ore producers, and has upset major customers in
China. However, it still faces substantial hurdles, in
particular approval by the European Commission, due to concerns
about excessive dominance of the iron ore market.
Heineken NV <HEIN.AS>, the world's third-largest brewer, was
down 0.5 percent. It has agreed a deal to brew and sell its own
brand beer in India and will integrate its various other
operations in the Asia Pacific region. ID:nLL631571]
The European index is still up 22 percent this year and has
surged 58 percent since hitting a record low in early March.
(Editing by David Cowell)
