* FTSEurofirst 300 up 0.2 pct, Euro STOXX 50 down 0.7 pct
* Investors cautious ahead of ECB, Spain debt auction
* European shares still cheap relative to book value
By Blaise Robinson
PARIS, Feb 6 European stocks were mixed at
midday on Wednesday as the previous session's tentative recovery
lost steam, with euro zone banks sliding on renewed concerns
over the health of the region's economy.
Intesa Sanpaolo dropped 2.7 percent, UniCredit
was down 2.4 percent, Commerzbank down 1.4
percent and Credit Agricole down 1.7 percent.
At 1200 GMT, the FTSEurofirst 300 index of top
European shares was up 0.2 percent at 1,156.78 points, after
gaining as much as 0.6 percent earlier in the session, while the
euro zone's blue chip Euro STOXX 50 index was down
0.6 percent at 2,636.26 points.
"The rebound is quite lame. It's better not to buy at the
moment, at least until indexes go back to this week's highs or
even last week's highs," Saxo Banque senior sales trader
Alexandre Baradez said.
"It's better to wait for a clear direction, which might not
come before tomorrow's ECB rate decision and press conference as
well as Spain's bond auction, whose results will be closely
watched as yields have been on the rise again."
European stocks suffered a sell-off on Monday sparked by
worries over a corruption scandal in Spain and polls showing
Italy's former prime minister Silvio Berlusconi regaining ground
before elections this month.
Both Madrid and Milan bourses were down on Wednesday, with
the IBEX losing 0.5 percent and the FTSE MIB
falling 0.7 percent. So far this year, the IBEX is down 1.4
percent, the laggard among Europe's main benchmark indexes.
Italy's MIB is up 2 percent in 2013, while the FTSEurofirst
300 is up 2 percent and the Euro STOXX 50 is down 0.1 percent.
Debt-stricken Spain, which has seen its bond yields rising
since mid-January, is set to issue up to 4.5 billion euros in
bonds on Thursday.
"MARKET WILL RISE BY PHASES"
Despite the recent return of worries over the ability of
Spain and Italy to cut their deficit and kick-start their
economies, Cholet Dupont strategist Vincent Guenzi said the
overall trend for European stocks was still positive as
liquidity from central banks remained abundant and strong
investment inflows into equities would continue to be
"We recommend taking advantage of these pull-backs to boost
exposure to equities in portfolios. The equity market will
continue to rise by phases, with a growing appetite for the
asset class from investors ... The correction phases should be
less violent than in 2011 and 2012," he said.
Cholet Dupont is "overweight" European equities, which are
seen as lagging U.S. stocks.
The broad STOXX Europe 600 index trades at 12 times
12-month forward earnings, its highest price-to-earnings ratio
(P/E) in nearly three years, although still below a 10-year
average of 12.2, according to Thomson Reuters Datastream.
However, European stocks look cheap when compared to
companies' book value. The average price-to-book ratio of
the STOXX 600 is 1.6, well below a 10-year average of 2.1.
By comparison, Wall Street's S&P 500 trades at a P/E
ratio of 13.4 and a P/B ratio of 2.2.
Around Europe on Wednesday, UK's FTSE 100 index was
up 0.5 percent, Germany's DAX index down 0.2 percent,
and France's CAC 40 down 0.6 percent.
Among the top gainers across Europe, shares in the world's
largest steelmaker ArcelorMittal rallied 3.1 percent,
bouncing back from a recent 10 percent slide after the company
forecast improved demand and earnings in 2013.
The upbeat outlook boosted shares in the sector, with German
steelmaker Salzgitter up 2.6 percent and Norwegian
aluminium maker Norsk Hydro up 1.1 percent.
Dutch telecom group KPN fell 3.8 percent, after
Tuesday's 16 percent plunge triggered by the company's plan to
launch a rights issue to reduce its debt load and protect its