European shares hit 1-month low in late sell-off, miners slip

* FTSEurofirst 300 index ends 0.9 percent lower

* Miners fall the most as stronger dollar hits metals

* Weaker euro seen helping European exporters

By Atul Prakash

LONDON, Sept 25 (Reuters) - European shares slipped to a one-month low in late trading on Thursday, tracking a sell-off in U.S. stocks, as a stronger dollar undercut prices for industrial metals, causing mining shares to drop.

The STOXX Europe 600 Basic Resources index fell 2 percent, making the sector the biggest decliner in Europe, as the prices of key base metals fell sharply following gains by the dollar index, which measures the U.S. currency against a basket of major currencies.

Miners Rio Tinto and BHP Billiton (NYSE: BBL - news) fell 2.4 percent and 2.9 percent respectively. Contributing to the loss was a drop in China's steel futures to a record low. That put more pressure on prices of iron ore, which have lost about 41 percent this year.

"The dollar is having its bull run right now and that's causing ripples around the world. Metals prices are getting depressed because of the currency and that is going to have a negative impact on mining companies," said Lorne Baring, managing director, B Capital Wealth Management.

"The larger commodity players might be able to withstand the downward pressure as they have stronger balance sheets, but mid-level players are going to be squeezed."

A stronger U.S. currency tends to make dollar-priced metals costlier for the holders of other currencies and lowers demand for the raw materials.

The FTSEurofirst 300 index of top European shares ended 0.9 percent lower at 1,373.09 points. It rose to a high of 1,391.80 in early trading before falling up to 1,369.63, the lowest since late August. A weaker open at Wall Street triggered the sell-off in Europe.

U.S. stock markets fell 1.5 to 1.9 percent after mixed data showed durable-goods orders declined by 18.2 percent in August, the largest drop since the series started in 1992.

Initial claims for state unemployment benefits rose 12,000 to 293,000 for the week ended Sept. 20, while the pace of growth in the U.S. services sector slowed in September.

Britain's blue-chip FTSE 100 fell 1 percent. It was also affected by comments from Bank of England Governor Mark Carney, who said the bank was getting nearer to raising rates, but the exact date would depend on economic data.

WEAKER EURO

However, analysts said that despite a sharp decline in shares on Thursday, a weaker euro was expected to help European exporters and boost the region's corporate earnings.

The single currency fell to its lowest level in nearly two years, reflecting a widening divergence between the monetary policy outlooks of the U.S. Federal Reserve and the European Central Bank.

Analysts and fund managers said the currency drop should boost earnings 3 to 6 percent, particularly for such industrial and pharmaceutical groups as Siemens and Sanofi (NasdaqGM: GCVRZ - news) , which get much of their revenue from outside the euro zone.

Aerospace group Airbus, who pays costs mostly in euros and sells planes mostly in dollars, rose 2.2 percent. For Airbus, a 10-cent move in the euro against the dollar translates into savings of 1 billion euros in profits at the operating level, analysts said.

"The currency headwind reversed in the third quarter and became a tailwind. And the U.S. economy is performing pretty well, which should also benefit European earnings. We see the European stock market grinding higher in the medium-term," Robert Parkes, director of equity strategy at HSBC, said.

"We believe that earnings will surprise on the upside. Improving earnings-revisions ratio reassures and signals that we might finally be coming through the end of the downgrade cycle we have been stuck in for three years now."

Europe bourses in 2014: http://link.reuters.com/pap87v

Asset performance in 2014: http://link.reuters.com/gap87v

Today's European research round-up (Additional reporting by Blaise Robinson in Paris; Editing by Dominic Evans, Larry King)