* FTSEurofirst 300 down 0.5 percent
* German PMI survey deals blow to market
* Lanxess weakens, predicts drop in Q1 profit
By Tricia Wright
LONDON, March 21 (Reuters) - European shares fell on
Thursday as investors, already jittery over Cyprus's debt
crisis, were confronted with data showing Germany's business
activity lost steam in March.
The data, which suggested Europe's largest economy would eke
out meagre growth this quarter, outweighed a pick-up in Chinese
factory activity and a commitment by the U.S. Federal Reserve
towards its stimulus programme.
Markit's flash composite Purchasing Managers' Index (PMI)
measuring growth in both manufacturing and services, which
together account for more than two-thirds of the German economy,
fell to 51.0 from 53.3 in February.
Philippe Gijsels, head of research at BNP Paribas Fortis
Global Markets, tempered however that PMI data has the
propensity to be very volatile, and would therefore "not read
too much into the figure".
"This is one reading; a lot of confirmation is needed over
the next couple of months to confirm that this is indeed
worse... but it is clear that it is enough against the
background of Cyprus to spook the markets a bit," he said.
Germany's Lanxess was among the top fallers on
Thursday, suffering a 6.3 percent drop, after the
synthetic-rubber maker warned that underlying core earnings
would drop sharply in the first quarter, the latest supplier to
take a hit from anaemic European car markets.
Cyprus's crisis preyed on investors' minds, with the
island's government endeavouring to avert a financial meltdown
and ordering banks to stay shut until next week, after the
debt-stricken country rejected the terms of a European Union
Strong macro data from China, showing a pick-up in growth in
the country's vast manufacturing sector, and a statement from
the Fed, which said it would stick to its $85 billion monthly
bond-buying stimulus, helped keep a floor under losses.
The FTSEurofirst 300 was down 0.5 percent at
1,193.22 by 0917 GMT, led down by mining stocks, among
the most sensitive to market nervousness. The index, with a 0.8
percent fall so far this week, is on course for its biggest
weekly drop since November.
Some investors remained relatively unfazed about the
situation in Cyprus, which they viewed as a short-term worry.
"I think (Cyprus) is very much just a stumbling block and
nothing else. I really don't think it's going to stop the market
and I don't see a big sell-off on the back of it at all," said
Terry Torrison, managing director at Monaco-based McLaren
"Personally I think things like China are much more