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* China's biggest stocks loss in over a month
* Japan recession fears rise
* European banks' earnings drag
By Jamie McGeever
LONDON, Oct 21 (Reuters) - European stocks fell on
Wednesday, dragged lower by negative third quarter earnings
reports and the biggest fall in Chinese stocks in over a month.
British publisher Pearson PSON.L slumped 16 percent after
warning about its earnings, and financials were hit as Swedish
banks missed earnings expectations and Credit Suisse CSGN.VX
announced plans to raise 6 billion Swiss francs ($6.3 billion)
in capital. ID:nL8N12L099
Chinese bourses gave up earlier gains to close down 3
percent, the biggest fall since Sept. 15. Resources and energy
stocks in Europe took their cue from that weakness and were
among the biggest losers in early trading .SXPP .
Commodity prices fell, while the cautious tone made for
lower yields across major government bond markets.
"A mixture of disappointing corporate results and continued
pressure from the commodity sector has sent stocks lower," said
David Madden, market analyst at IG in London.
"Equity markets have suffered a few severe sell-offs since
the summer and they are still nervous, and an absence of
positive news is seen a negative," he said.
In mid-morning trade the FTSEuroFirst index of leading 300
European shares was down two thirds of one percent at 1,423
points .FTEU3 . Pearson was the biggest loser, down 16 percent
PSON.L , and Credit Suisse was down 4 percent. ID:nL8N12L099
Germany's DAX was flat .GDAXI , France's CAC 40 was down
0.5 percent .FCHI and Britain's FTSE 100 .FTSE was down 0.3
percent.
In Asia MSCI's broadest index of Asia-Pacific shares outside
Japan .MIAPJ0000PUS slipped 0.3 percent.
In Japan, the slowest growth in exports in over a year
fuelled talk of recession but the prospect of more stimulus from
the Bank of Japan lifted the Nikkei 225 to its highest since
Sept. 9, ending up 1.9 percent at 18,554 points .N225 .
ID:nL3N12I05T
U.S. futures pointed to a slightly higher opening on Wall
Street of up to 0.2 percent ESc1 , essentially reversing
Tuesday's small losses.
ECB TO STAY PUT?
Earnings for S&P 500 companies are expected to have fallen
about 4 percent in the third quarter, while revenue is expected
to have declined 3.8 percent, according to Thomson Reuters data.
Economic news from the United States was moderately upbeat
as housing starts increased 6.5 percent in September to an
annual pace of 1.21 million units, beating expectations for 1.15
million units.
There was also better news on bank lending in the euro zone
as data from the European Central Bank on Tuesday showed a
further easing in credit conditions and improving demand for
loans.
That might lessen the need for the ECB to immediately ramp
up its 1 trillion euro asset purchase program.
The ECB's governing council meets on Thursday and markets
expect it to highlight a willingness to act to boost inflation,
but not just yet.
"Actions are highly unlikely this week. But its words will
need to confirm a strong dovish bias that keeps the ECB on track
for extra QE (quantitative easing) in December if the market is
to keep its composure," Royal Bank of Scotland (L:RBS) analysts wrote in
a client note on Wednesday.
The euro was a whisker higher at $1.1355 EUR= , but still
hemmed in by support at $1.3300 and resistance around $1.1386.
The dollar index was last down 0.1 percent at 94.841 .DXY .
The Australian dollar was the biggest mover among the major
currencies, under pressure from the weakness in Chinese stocks
and world commodity prices. It was last down 0.5 percent at
$0.7220 AUD= .
Oil prices softened on speculation U.S. inventory data would
only underline the extent of oversupply in the world. The U.S.
Energy Information Administration (EIA) will report official
inventory data on Wednesday.
U.S. crude CLc1 fell 1.5 percent to $45.60 per barrel,
while Brent LCOc1 lost 0.8 percent to $48.31.
In bonds the 10-year U.S. Treasury yield was down almost 3
basis points at 2.045 percent US10YT=RR .