Weaker oil stocks hit European equities, UBS drops

By Atul Prakash

LONDON, Feb 10 (Reuters) - European shares fell for a second day on Tuesday, with energy stocks hurt most after crude prices slid again on concerns about oil demand in China.

Swiss bank UBS dropped 3.2 percent after it warned on the impact of the surging Swiss franc and negative interest rates in Switzerland and the euro zone. UBS's fall came despite the bank promising its biggest payout to shareholders since the financial crisis and announcing a "solid" start to 2015.

Among sectors, the STOXX Europe 600 Oil and Gas index slipped 1.5 percent after Brent fell below $58 a barrel as Chinese inflation data raised concerns about oil demand in the world's second-largest economy.

"It's difficult to see a big recovery in oil prices in the near term as the upside is limited in the current environment because of the huge supply glut," Peter Dixon, equity strategist at Commerzbank, said, adding oil shares would continue to mirror moves in energy prices.

Oil majors BP, BG Group and Royal Dutch Shell fell 1.7 to 2.3 percent, putting pressure on the broader market. The pan-European FTSEurofirst 300 index was down 0.2 percent at 1,476.99 points at 0923 GMT.

In contrast, security camera maker Axis AB surged nearly 50 percent after Japan's Canon said it plans to buy the Swedish firm for about 23.6 billion Swedish crowns ($2.83 billion) to expand into surveillance products.

French tyre maker Michelin fell 4.5 percent after posting an 8.5 percent profit decline for 2014 on sales that missed its own forecast, prompting the company to pledge to step up cost-cutting efforts.

Across Europe, Greek shares partly recovered after falling more than 10 percent over the previous three sessions, with the country's benchmark ATG share index gaining 2.5 percent.

However, investors stayed cautious as Greece and its euro zone partners remained engaged in brinkmanship, with Greek Prime Minister Alexis Tsipras insisting his country would not extend its reform-linked bailout and Germany saying it would get no more money without such a programme.

Greek Defence Minister Panos Kammenos said if Greece failed to get a new debt agreement with the euro zone, it could always look elsewhere for help. European Commission President Jean-Claude Juncker warned Greeks not to expect the euro zone to bow to Tsipras' demands.

Among other movers, Raiffeisen Bank International jumped 6.5 percent after saying it planned to sell operations in Poland and Slovenia and cut back in Russia in a radical overhaul to help shrink its balance sheet. (Editing by Susan Fenton)

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