* FTSEurofirst 300 down 0.2 pct at 1,104.95 points
* Euro STOXX 50 falls 0.4 pct to 2,532.58 points
* Equity markets slip on new U.S. fiscal cliff worries
* Banks fall with Raiffeisen down 5 pct
By Sudip Kar-Gupta
LONDON, Nov 28 European shares dipped on
Wednesday as concerns over U.S. lawmakers' lack of progress on a
deal to avoid looming spending cuts and tax hikes affected the
region's stock markets.
The pan-European FTSEurofirst 300 index, which rose
4 percent last week, slipped 0.2 percent to 1,104.95 points by
midday. The euro zone's blue-chip Euro STOXX 50 index
fell 0.4 percent to 2,532.58 points.
U.S. Senate Majority Leader Harry Reid said on Tuesday he
was disappointed there had been "little progress" among Democrat
and Republican lawmakers as they try to reach a deal to avoid
the year-end "fiscal cliff".
The term refers to $600 million in spending cuts and tax
hikes that will be triggered if there is no agreement to stop
them. It is feared they could derail the U.S. economic recovery,
in turn hurting the global economy.
Berkeley Futures associate director Richard Griffiths said
Reid's comments had led to "light selling" of futures contracts
on Germany's DAX equity index and the Euro STOXX 50.
The December DAX futures contract was down by 0.3
percent to 7,318.50 points, while the December Euro STOXX 50
futures contract fell 0.4 percent to 2,530 points.
"We're entering into a period of uncertainty. I don't see
much reason for buying the market at this moment. I see the
market drifting downwards in the weeks to come," said Griffiths.
Banking shares, which are "high beta" stocks that often
outperform a rising market and underperform a falling market,
took the most points off the FTSEurofirst 300 index, with the
STOXX 600 Europe bank index falling 1 percent.
Austrian-based bank Raiffeisen was the
worst-performing stock on the FTSEurofirst 300 index, declining
by more than 5 percent after the bank said it expected bad loans
to rise given the tough market conditions.
Yet despite persistent worries over the global economy and
euro zone debt crisis, European equities have held onto gains
made since late July, when European Central Bank head Mario
Draghi pledged "whatever it takes" to protect the euro currency.
The FTSEurofirst 300 is still up by around 10 percent since
late July, while the Euro STOXX 50 has risen around 13 percent
in that time.
Several traders took a more positive view on the outlook for
European equities, with many investors expecting a traditional
year-end rally in stock markets and an eventual U.S. political
compromise to avert any "fiscal cliff" hit to the economy.
"If there were real worries about the fiscal cliff, the
market would have fallen by more," said MB Capital trading
director Marcus Bullus.
Tavira Securities head of trading Toby Campbell-Gray also
expected European shares to hold near their current levels.
"I would use any weakness in the equity market to put money
in the market. The investment community largely knows about the
fiscal cliff and the problems in the euro zone, and investors
still want to buy this market," he said.