European shares hit one-month low, airlines hit by bird flu concerns

Last Updated: Fri, Apr 05, 2013 09:00 hrs

* FTSEurofirst 300 index falls 0.2 percent

* Caution ahead of U.S. non-farm payrolls data

* Airlines fall on Asia bird-flu concerns

By Atul Prakash

LONDON, April 5 (Reuters) - European shares extended losses on Friday to touch a one-month low, with recent poor U.S. data raising concerns that Friday's widely watched non-farm payrolls data may also disappoint.

Airlines stocks also put downward pressure on the market, hit by concerns the spread of bird flu in Asia could hurt air traffic.

Investors focused on the U.S. data, which is likely to show employers added 200,000 jobs last month. But recent weak figures, including Thursday's report showing the number of Americans filing new unemployment benefit claims at a four-month high, have raised doubts about March payrolls, due at 1230 GMT.

"We have seen some moderation in the pace of growth in the United States. The fundamentals are not as supportive as they were this time last year," Gerard Lane, equity strategist at Shore Capital, said.

"But the U.S. Federal Reserve's quantitative easing programme isn't going away and hence it's difficult to see, despite my caution on the fundamentals, the market coming off sharply in the near term."

At 0809 GMT, the FTSEurofirst 300 index was down 0.2 percent at 1,177.86 points, after falling to a one-month low of 1,176.33. The index fell 1.1 percent in the previous session, but is still up about 4 percent so far this year.

The STOXX Europe 600 Travel and Leisure index fell 1.6 percent, the worst-performing European sector, with airline stocks falling more than others on concerns about the spread of bird flu in China.

Air France-KLM, Lufthansa, IAG and Ryanair fell by between 3.3 and 4.7 percent.

"The sector is reacting to fears of a new pandemic of bird flu in China, which would hurt air traffic," says a Paris-based airline sector analyst.

"For now, investors are pricing in a bad scenario, although if you look back four years ago, Chinese authorities did a good job dealing with the pandemic back then, and the airline sector didn't suffer much."

British budget carrier easyJet fell 3.5 percent despite saying that it would nearly halve its first-half loss.

Mike van Dulken, head of research at Accendo Markets, said that with the share price having soared 380 percent since a low in September 2011, technical signals were beginning to suggest traders were losing interest, "questioning whether this flight has gone too far and the shares (are) running out of fuel."

Charts indicated that European shares would remain rangebound in the near term.

"The consolidation in the Euro STOXX 50 is likely to expand. The good performing members of the index are also in a medium-term overbought situation and have started to consolidate," Petra von Kerssenbrock, analyst at Commerzbank, said.

The euro zone's blue chip Euro STOXX 50 index was up 0.2 percent at 2,626.34 after falling 0.7 percent in the previous session.

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