* FTSEurofirst 300 index falls 0.8 pct
* Auto stocks worse performers on slowdown worries
* Housing starts could give market a boost
By Joanne Frearson
LONDON, March 20 (Reuters) - European shares fell for a
second day on Tuesday, as investors took more profits after a
rally to an eight month high last week, although U.S. housing
starts data could give the market a boost if it shows signs of a
The U.S. Housing Starts/Building Permits figures were due at
1230 GMT and a positive number would add to evidence the United
States is showing signs of recovery, supporting European
companies that have exposure there.
Traders moved out of auto stocks into more defensive telecom
for a second day after Russia's Deputy Industry and Trade
Minister Alexei Rakhmanov indicated a slowdown in car sales.
The worst performers were Daimler and BMW
which fell 4.1 percent and 3.7 percent also hit by
rumours that German car sales in China were being discounted by
more than expected.
The STOXX Europe 600 Telecommunications index was
the best performing sector up 0.7 percent, with Vodafone
, which offers a dividend yield of 5.4 percent, up 1.9
percent making it the top performer on the FTSE 100.
"Stocks are consolidating after the rally and there are some
stories that German carmakers are accepting a little bit more of
a discount in China than expected," Veronika Pechlaner, a fund
manager on the Ashburton European equity fund, said.
"We own Vodafone due to its attractive dividend
yield and good cash flow."
A meeting between Italy's Prime Minister and trade unions
also made investors nervous on worries they would be able to
implement the reforms needed to help turn around the country.
Traders' nervousness could be seen in the Euro STOXX 50
volatility index, a key gauge of Europe's
investor 'fear' which jumped 4.3 percent after three-days of
The higher the volatility index, the lower investor appetite
By 0932 GMT, the pan-European FTSEurofirst 300 .FTEU3 index
of top shares was down 0.8 percent at 1,096.55 points after
hitting an eight month high last week.
The FTSEurofirst 300 index has gained 9.8 percent this year
following the European Central Bank LTRO program, which offered
banks cheap money and helped put liquidity back into the
"It is struggling to hold onto the recent gains. Our clients
are now looking to go short and sell into the rally," said Joe
Rundle, head of trading at ETX Capital.
"If there is some improvement in the U.S. housing starts it
may give a little push upwards."