* FTSEurofirst 300 falls 0.2 pct, Euro STOXX 50 down 0.6 pct
* Signs of Chinese slowdown hits mining stocks
* Banks fall with Lloyds hit by compensation charge
* Markets seen rangebound in March, Italy still a worry
By Sudip Kar-Gupta
LONDON, March 1 European shares edged lower on
Friday, dragged down by weaker bank and mining stocks, and
traders expected equities to stay in a tight range this month
with uncertainty in the wake of Italy's inconclusive elections
The pan-European FTSEurofirst 300 index closed down
0.2 percent at 1,168.64 points while the euro zone's blue-chip
Euro STOXX 50 index fell 0.6 percent to 2,616.75
The STOXX Europe 600 Basic Resources index, which
includes mining stocks, was the worst-performing equity sector
as it fell 1.9 percent on fresh signs of an economic slowdown in
China, which is the world's biggest metals consumer.
The European banking sector retreated 1.3 percent,
with British bank Lloyds falling 2.2 percent after
setting aside 1.5 billion pounds ($2.3 billion) to compensate
customers who were mis-sold loan insurance.
Rupert Baker, a European equity sales executive for Mirabaud
Securities, said stock markets may not resume their upwards
trajectory until April.
"March is normally rangebound before it improves for another
push higher in April," he said, adding that investors were still
buying shares on days when the market fell due to expectations
of a gradual rally on equities over the course of 2013.
"Are we still buyers on the dip? Yes, more or less. The
corporate sector has had some fairly decent results," he said.
According to Thomson Reuters Starmine data, 60 percent of
the companies on the pan-European STOXX 600 index to
have reported fourth-quarter results so far have produced
results that have either beaten or met market forecasts.
One such company was French defence electronics group Thales
, which posted higher profits and pledged to boost
margins, leading its shares to surge 12.3 percent to finish at
the top of the FTSEurofirst 300 index.
ITALIAN WORRIES LINGER
However, Italy's political deadlock - which could impact the
debt-ridden country's plans for economic reforms - remained a
The country's benchmark FTSE MIB equity index fell
1.5 percent on the first day of a new Italian financial
transaction tax, which is set to hit trading volumes and could
make the Milan stock market less attractive.
Strategists at Barclays expected a coalition government
would eventually be formed in Italy while pledges from the
European Central Bank (ECB) to protect the euro currency from
the region's debt crisis would also prevent any major market
Nevertheless, Barclays advised investors to protect
themselves against a near-term fall on the blue-chip Euro STOXX
50 over the next month by buying "put" options, which allow
investors to bet on a future fall in the market.
It advised taking out a Euro STOXX 50 "put" with a strike
price of 2,550 points and an April maturity - implying a near 3
percent fall on that index by next month.
Evidence of Europe's problems, with Spain also at risk of
needing a state bailout, was provided on Friday with data
showing that Germany and Ireland were the only two euro zone
members with factory output growth last month.
Richard Edwards, who heads London-based trading and research
firm HED Capital, recommended that investors favour German
equities over Spain and Italy.
"I would keep selling rallies on Spain and Italy and keep
buying dips in Germany," he said.