* FTSEurofirst 300 closes down 0.3 percent at 1,226.58
* Asia growth, talk of Fed QE tapering weighs on stocks
* HSBC (LSE: HSBA.L - news) leads financials lower on growth and US worries
* Next falls as Morgan Stanley (Xetra: 885836 - news) cuts to "underweight"
By David Brett
LONDON, May 24 (Reuters) - European shares fell on Friday,
marking their first weekly loss in a month, led by financials on
concern over earnings prospects in Asia and the potential
scaling back of U.S. monetary stimulus.
The FTSEurofirst 300 closed down 3.36 points, or
0.3 percent, at 1,226.58, to end the week 1.7 percent lower.
Downbeat data from China and concerns about how long U.S.
stimulus will remain intact, fuelled by comments from Federal
Reserve chairman Ben Bernanke earlier in the week, have prompted
profit taking over the past two days, pulling equity indexes off
multi-year highs.
"We remain positive on equities in general ... (but) more
broadly equity markets may lose some momentum now that they must
worry about stimulus withdrawal," Guy Foster, head of portfolio
strategy at Brewin Dolphin (LSE: BRW.L - news) , said.
European shares have rallied nearly 30 percent since
mid-2012, helped by central bank easy monetary policy, including
low interest rates and bond purchases, which has driven down
yields of other asset classes, in turn forcing investors into
equities for their higher returns.
Financials , which have enjoyed a stellar
quarter so far, were the biggest losers on Friday while auto
makers and basic resources each fell 0.8
percent.
"Investors distrust the recovery in banks and insurers
relative to the broader market, as financials are less able to
distribute the monetary largesse that has resulted from QE,"
Simon Maughan, head of research at Olive Tree Financial Group,
said.
Index heavyweight HSBC fell 2.1 percent, dented by
Asia growth worries and stalled talks over money laundering with
U.S. authorities.
HSBC's shares have corrected nearly 6 percent since hitting
four-and-a-half year highs on Wednesday, and are now back below
738 pence. Charts showed further downside potential to prior
lows and their six-and-a-half year falling trendline of
resistance-turned-support at around 660-665 pence.
British retailer Next shed 2.4 percent as Morgan
Stanley cut its rating to "underweight". With the stock's
valuation at 10-year highs the investment bank recommended
investors switch to UK rival Marks & Spencer (Other OTC: MAKSY - news) .
Foster at Brewin Dolphin, however, sees more gains to be had
from trading out of safer sectors, which include pharmaceuticals
and utilities, and into cyclical stocks, once valuations have
cooled and economic data strengthens.
The options market appeared to support that view. The number
of bets being placed on the market falling further has declined
to below the two-year daily average, according to Thomson
Reuters Datastream.
(Editing by Susan Fenton)
