(Corrects spelling of trader's name in sixth paragraph.)
* STOXX 600 down 0.7 pct; index is down 6 pct this year
* Utilities, real estate lead fallers
* Deutsche Bank's rebounds further in positive bank sector
* Tesco hits highest in over a year on strong earnings
By Danilo Masoni
MILAN, Oct 5 European shares fell on Wednesday
on concern the European Central Bank might reduce the pace of
bond buying before its purchase programme ends, hitting
utilities and real estate stocks hardest.
The STOXX 600 was down 0.7 percent by 0815 GMT,
with all sectors but financials in the red, and following a rise
of 0.8 percent in the previous session. The pan-European index
is down around 6 percent so far this year.
British retailer Tesco soared on a well-received
Bloomberg reported late on Tuesday that the ECB will
probably gradually wind down its bond purchases before it
concludes quantitative easing, rattling global markets and
sending bond prices lower.
The ECB said its decision-making body had not discussed
reducing the pace of its monthly bond buying, and some investors
said it was too early to say whether market concerns were
"No doubt ECB QE (quantitative easing) won't go on forever,
but at the same time QE has still a bit to run and ... it might
be premature to assume that the ECB has made any decision
regarding QE going forward," said Markus Huber, trader at City
of London Markets.
The utilities and real estate indexes,
which tend to outperform when yields contract because sector
stocks offer a stable income stream, were down 1.4 percent and
1.9 percent respectively.
Banks rose as a gradual reduction of ECB bond purchases
would tend to alleviate pressure on their margins, stretched by
ultra-low interest rates. The STOXX 600 Bank index rose
0.5 percent, with Italian lenders Intesa Sanpaolo and
UniCredit which rising 2 percent and 1 percent
Deutsche Bank rose 1 percent after German markets
newsletter Platow Brief reported that the German lender was
hoping for a settlement of $4-5 billion by end-October with U.S.
authorities seeking a fine of up to $14 billion for the
mis-selling of mortgage-backed securities.
Tesco rose 7.8 percent, touching its highest level in more
than a year after posting first-half results at the top end of
expectations. It said it would increase investment to boost
profitability over the next three years.
Telecoms group SFR fell 5.3 percent after
France's market watchdog blocked an all-share buyout offer from
Insurer NN Group fell 3.7 percent after launching a
bid for smaller peer Delta Lloyd. Delta Lloyd soared 28
percent to a touch below NN Group's offer price.
(Reporting by Danilo Masoni; editing by John Stonestreet)