* FTSEurofirst 300 index falls 0.6 percent
* Barclays down 4.1 pct on Qatar news; banks slip
* Morgan Stanley, SocGen stay positive on equities
By Atul Prakash
LONDON, Nov 26 A 4-percent drop for Barclays
led European banking shares lower on Monday after Qatar
sold its remaining warrants in the bank, helping pull blue chip
share indices off highs hit last week.
Barclays fell 4.1 percent, while the STOXX Europe 600
banking index, lost 1.1 percent, making it the top
sectoral decliner, after Qatar Holding said late on Sunday it
had monetized its remaining holding of 379 million units of
Barclays warrants - instruments that convert into shares.
There were some caution related to talks aimed at sealing
the release of another tranche of aid for Greece, but analysts
said upbeat signs from officials bode well for a positive result
from a meeting of euro zone finance ministers.
"It (the Barclays news) has created some short-term
technical selling pressure on the sector, rather than anything
more fundamental," said Robert Parkes, equity strategist with
"We have been positive on the banking sector as we think it
is undervalued and we are starting to see a stabilisation in
earnings relative to the wider market."
Vitor Constancio, vice president of the European Central
Bank, said he expected lenders to reach a deal on further aid
for Greece on Monday although he said it would not include any
debt writeoff for its public creditors - a sticking point
previously in the talks.
Euro zone ministers and their deputies have held numerous
meetings and conference calls over the last two weeks to decide
how Greek debt could be cut to a more sustainable level, but a
lack of agreement has prevented the release of bailout funds.
Andy Lynch, European fund manager at Schroders that manages
about $300 billion, said he was not concerned about Greece as
its lenders would muddle through to find a solution, adding that
Monday's weakness was mainly the result of profit-taking after
the previous week's strong gains.
The FTSEurofirst 300 fell 0.6 percent to 1,103.77
points by 1207 GMT after advancing for five straight sessions
and surging 4 percent last week, the best performance since
early December last year.
"Last week was very good for the markets and it seems that
investors are taking a breather ahead of the euro zone meeting.
There is some caution, but it is also clear that Greece's
lenders will not allow the country to fail," said Koen De Leus,
senior economist at KBC in Brussels.
"We are on the optimistic side. Investors should have
stop-losses in place to minimise their losses, but should be
prepared to buy the dips."
Equity strategists remained positive on the market's outlook
in the medium-term on expectations that uncertainty related to
the euro zone debt situation and the U.S. "fiscal cliff" of
scheduled tax rises and spending cuts from 2013 would abate.
Strategists at Morgan Stanley upgraded European equities to
"attractive" from "neutral" in a 2013 outlook, expecting
double-digit percentage growth from the MSCI Europe index with
earnings revisions beginning to improve and global economic
indicators appearing to be troughing.
Societe Generale strategists said European stocks should
remain 'fairly resilient' next year, saying the market was
likely to benefit from an increase in risk appetite when policy
uncertainty was lifted on Greece and Spain.
However, for those investors who wanted to minimise risks
associated with the "fiscal cliff" and refinanciing needs of
Spain and Greece, BNP Paribas recommended taking advantage of
eight-month low option prices to buy short-term protection.
Investors' focus remained on Europe, with tens of thousands
of Italians rallying across the country over the weekend to
protest against austerity measures, and separatists in Spain's
Catalonia winning regional elections on Sunday.
The euro zone's blue chip Euro STOXX 50 index
dropped 0.6 percent at 2,540.96 points after surging 5.3 percent
last week, the best weekly performance in nearly a year.
"The index is seen finding support at 2,450 from where it
bounced back on several occasions in the past weeks," Petra von
Kerssenbrock, technical analyst at Commerzbank, said.
"We still have abundant liquidity in the market and the
positive ground tone prevails. It faces a massive resistance at
2,600, which proved to be a resistance in March 2012 and was a
support back in July 2011. It will be difficult to break the
level but we could go there and test it."
Among other sharp movers, German steelmaker ThyssenKrupp
fell 4.9 percent following a downgrade by Credit
Suisse and a report it may need until next year to sell steel
mills in the U.S. and Brazil.