* FTSEurofirst 300 down 0.2 pct, Euro STOXX 50 down 0.8 pct
* Greek stocks fall on speculation of third bailout
* EADS, BAE sink as investors question merger rationale
By Blaise Robinson
PARIS, Sept 13 (Reuters) - European stocks fell on Thursday,
taking a pause in their sharp three-month rally, as investors
awaited to see if the U.S. Federal Reserve would unveil further
stimulus measures which could further boost appetite for risky
The euro zone's blue chip Euro STOXX 50 index
ended 0.8 percent lower at 2,543.22 points, retreating from a
near-six month high hit in the previous session, while the
FTSEurofirst 300 index of top European shares closed
0.2 percent lower at 1,106.27 points.
After the European closing bell, the Fed launched another
aggressive stimulus programme, saying it will buy $40 billion of
mortgage debt per month and continue to purchase assets until
the outlook for jobs improves substantially.
"That's what the market had been expecting," a Paris-based
equity and ETF sales trader said.
"Now let's see if QE3 will effectively kick-start the
economy and not just fuel a rally in commodities, and let's see
if the ECB's bond buying programme will really stop Europe's
debt crisis. That remains to be seen and it looks like markets
have gone ahead of themselves," he said.
Euro zone banking stocks were among the top losers on
Thursday, trimming recent lofty gains, with Societe Generale
down 3.3 percent and Banco Popolare down 1.8
The euro zone STOXX bank index is still up 48
percent since Draghi said in late July the ECB was ready to take
all necessary measures to save the euro.
Despite the losses in euro zone stocks on Thursday, tensions
surrounding the euro zone debt crisis further eased, with
Italy's 10-year bond yields falling to their
lowest levels in nearly six months around 5 percent, down from a
peak of 6.6 percent hit in late July.
Greece's ATG index dropped 3.7 percent on Thursday,
reversing the previous session's rally on speculation that the
indebted country could need a third bailout.
Greece's Finance Minister later denied the speculation.
The troika of Greece's international lenders, including the
International Monetary Fund and the European Union, is currently
assessing Greece's progress on its reforms before it decides on
its next aid tranche.
EADS, BAE PLUNGE
Around Europe, UK's FTSE 100 index bucked the trend
on Thursday, rising 0.7 percent, boosted by strong appetite for
stocks seen as defensives such as telecom firm Vodafone,
up 1.9 percent and pharma group GlaxoSmithKline, up 1.3
Germany's DAX index ended down 0.5 percent and
France's CAC 40 down 1.2 percent.
EADS sank 10.2 percent - in volumes more than 12
times the stock's average volume of the past three months - as
investors questioned the rationale of its planned merger with UK
peer BAE Systems.
Shares in the Airbus parent have plummeted 15 percent over
the past two sessions, wiping about 3.8 billion euros ($4.9
billion) off the company's market value, or roughly the price of
12 Airbus A380 superjumbos.
"I don't think there is a single institutional fund manager
backing the deal," said Argonaut fund manager Barry Norris, who
owns 500,000 EADS shares.
"EADS is an amazingly attractive company and it is a growth
stock, while BAE is a profitable business but it is not growing.
The EADS-BAE deal would oblige us to share the upside with BAE
when we don't want to. This deal has no industrial sense, and no
synergies, it is all about politics and egos."
Shares in BAE lost 7.3 percent on Thursday, surrendering
most of their gains made since the merger talks were revealed on