European shares down

LONDON (Reuters) - European shares surrendered early gains to fall on Wednesday, as financial stocks extended previous session's losses, while Rio Tinto <RIO.L> led miners to trade in negative territory.

At 8:20 a.m., the FTSEurofirst 300 <.FTEU3> index of top European shares was down 0.3 percent at 850.42 points after rising as high as 855.31. The benchmark index, which slumped 45 percent in 2008, is still up about 32 percent from its March 9 lifetime low.

Financial stocks fell, with HSBC <HSBA.L> down 1.5 percent, Barclays <BARC.L> falling 4 percent, Lloyds <LLOY.L> slipping 4.1 percent and UBS <UBSN.VX> declining 2.7 percent.

Analysts said that despite some profit-taking this week, the market sentiment has improved.

"The nadir that was March 2009 has been long forgotten, as talk of 'green shoots' replacing 'credit crunch' as the phrase of the moment," said Chris Hossain, senior sales manager at ODL Securities.

"Whether realistic or not, more and more people are buying in to the recovery play, looking for undervalued stocks as opposed to the next big faller."

Miners also retreated. BHP Billiton <BLT.L>, Anglo American <AAL.L>, Antofagasta <ANTO.L>, Rio Tinto <RIO.L>, Xstrata <STA.L> and Eurasian Natural Resources <ENRC.L> were down 0.2 to 1.6 percent.

Rio Tinto <RIO.L> fell 3 percent on growing speculation the global miner is set to launch a rights issue instead of selling $19.5 billion (12.7 billion pounds) in stock and assets to China's Chinalco aluminium group.

(Reporting by Atul Prakash)

Article Published: 13/05/2009