October 14, 2014 / 11:17 AM / 4 years ago

European shares sink to 8-month low on growth jitters

* Pan-European FTSEurofirst 300 falls 0.9 percent

* German investor morale lowest in almost 2 years

* Banks, luxury goods stocks fall sharply

By Atul Prakash

LONDON, Oct 14 (Reuters) - Europe’s benchmark share index slipped to an eight-month low on Tuesday on growing concerns about the pace of global growth, as a survey showed German investor morale has plunged to its lowest in almost two years.

Think tank ZEW’s monthly survey of German economic sentiment tumbled for a 10th straight month to -3.6, the weakest reading since November 2012, suggesting Europe’s largest economy was reeling from crises abroad and a weak euro zone.

“The survey further confirmed the stagnation in Europe, which is building on a negative sentiment that has already been growing with previous data points. We are cautious on Europe and therefore very cautious on cyclicals such as banks,” said Lorne Baring, managing director of B Capital Wealth Management.

“Investors are pricing in continued bad data prints across Europe. But a weaker euro, QE (quantitative easing) prospects and cheap valuation of blue-chip, export-led stocks in Europe might provide a base for a share rebound.”

Germany’s DAX index fell 0.9 percent in a broader market sell-off, taking its recent losses to about 12 percent in less than four weeks. France’s CAC was down 1.1 percent while Italy’s FTSE MIB index dropped 1.4 percent.

At 1046 GMT, the FTSEurofirst 300 index of top European shares was down 1.1 percent at 1,279.36 points after falling as much as 1,274.87, the lowest since early February.

The index has lost nearly 10 percent since mid-September, mirroring a sharp pull-back in equity markets worldwide on jitters about the outlook for global growth and uncertainty over the timing of an expected first U.S. interest rate hike.

“We recommend selling in the short term,” Aurel BGC analyst Gerard Sagnier said. “European indexes have pierced below long-term support levels, and downward trends are shaping up. It’s too early to buy the dips.”

Cyclical sectors lost ground, with the STOXX Europe 600 Banking index falling 1.4 percent ahead of more earnings reports this week from major U.S. financial companies such as Citi, Bank of America, Goldman Sachs and Morgan Stanley.

U.S. bank JPMorgan Chase & Co posted a net income of $5.6 billion, or $1.36 per share, in the three months ended Sept. 30. Analysts had expected earnings of $1.38 per share, according to Thomson Reuters I/B/E/S.

Luxury stocks also faced the selling pressure, with Burberry featuring among the biggest losers in Europe, down 4.3 percent, after warning that market conditions were becoming more difficult. The warning hurt other luxury goods firms, with Louis Vuitton owner LVMH down 1.4 percent.

Smaller rival Mulberry tumbled 10 percent after saying full-year pre-tax profit would be significantly below expectations after a slump in first-half trading added to the disruption of a product overhaul.

Bucking the trend, shares in Iliad surged 11 percent in brisk volumes after the French low-cost telecoms operator dropped its bid to buy T-Mobile U.S. Inc.

Europe bourses in 2014: link.reuters.com/pap87v

Asset performance in 2014: link.reuters.com/gap87v

Today’s European research round-up (Additional reporting by Blaise Robinson in Paris; Editing by Hugh Lawson)

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