* FTSEurofirst 300 down 0.1 pct, Euro STOXX 50 down 0.2 pct
* Euro STOXX 50 halted at major resistance level from 2011
* Banking stocks extend rally on softened Basel rules
* Germany's DAX dragged by data showing slide in exports
* Credit Suisse's tactical indicators signal overheating
By Blaise Robinson
PARIS, Jan 8 European shares dipped on Tuesday,
tracking losses on Wall Street, with a key blue-chip index
halted by a major resistance level and investors braced for
sluggish corporate results in the upcoming earnings season.
Losses were limited, however, by further gains in the euro
zone banking sector, sparked earlier this week by news that
incoming global bank liquidity rules will be softened, giving
the lenders extra breathing space.
Banco Popolare surged 3.6 percent, Societe
Generale added 3.2 percent, and UniCredit
gained 2.1 percent.
The FTSEurofirst 300 index of top European shares
closed 0.1 percent lower at 1,160.20 points, drifting away from
a near-two-year high hit on Monday.
The euro zone's blue chip Euro STOXX 50 index
fell 0.2 percent, to 2,691.45 points.
After a sharp rally started in mid-November, the benchmark
index has been halted for a week by a major resistance level at
2,709 points, representing the starting point of a near 30
percent nosedive in mid-2011.
"Charts show some hesitation at major resistances, so it
doesn't look too good on the short term," said Philippe de
Vandiere, analyst at Altedia Investment Consulting.
"Earnings are not going to be good, with a lot of company
results hit by restructuring costs. We already know it will be
grim, so the focus will be on the outlook, basically any comment
about visibility, which seems to be nil at the moment."
De Vandiere remains positive on European equities on the
medium term, however, pointing out to the lack of alternatives
for investors, with extremely tight yield spreads on corporate
"A lot of investors are hungry for yields at the moment, and
equities offer a relatively good value. We're already seeing
flows coming out of the fixed income space and into equities,
although retail investors haven't switched yet," he said.
"On the medium term, there is still potential for European
stocks to continue their relief rally, while U.S. shares look a
big pricey at these levels."
U.S. Aluminium major Alcoa Inc is set to kick-start
the fourth-quarter earnings season after Wall Street's closing
bell on Tuesday, and as the first component of the Dow Jones
industrial average to report, the group's results are
seen as setting the tone for the reason.
Around Europe, UK's FTSE 100 index fell 0.2 percent
on Tuesday, France's CAC 40 gained 0.03 percent, Spain's
IBEX added 0.4 percent and Italy's FTSE MIB
climbed 0.3 percent.
Germany's DAX index underperformed, losing 0.5
percent, hit by data showing a slide in the country's exports
and industry orders, which fuelled worries the euro zone crisis
may have pulled the region's largest economy into contraction
late last year.
Shares in Vodafone rose 1.7 percent after its
partner in U.S. joint venture Verizon Wireless said it would be
"feasible" to buy out the British telecom giant.
The euro zone's blue chip Euro STOXX 50 has jumped nearly 30
percent since early June, when fears about a break-up of the
euro zone started to abate, a 'relief rally' which could
continue in 2013, Dorval Finance fund manager Sophie Chauvellier
"We're really at the beginning of a phase of revaluation of
asset prices. At this point, equities are the only asset class
where risk is correctly remunerated," she said.
Strategists at Credit Suisse, however, are concerned about
the risk of investor complacency while concerns about U.S.
fiscal problems continue to brew, prompting them to turn more
cautious on equities and forecast a consolidation phase.
"Our tactical indicators for equities have moved to elevated
- but not yet alarming - levels," they wrote in a note.
"Global risk appetite is one standard deviation above its
norm, while equity sector risk appetite is 0.4 standard
deviations above and our composite equity sentiment indicator is
close to 2-year highs. The net long position of hedge funds is
at the highest level since July 2011, while net corporate buying
and insider buying are falling."