European shares slip back after ECB chief's comments

European shares slipped in early trade, giving back some of the strong gains from the previous session after downbeat comments on the economy from European Central Bank President Mario Draghi. At 0915 GMT, the FTSEurofirst 300 index of top European shares was down 0.5 percent at 976.89 points, after rising 3.6 percent in the previous session, when central banks acted jointly to provide cheaper dollar liquidity to starved European banks and China reduced the reserve rate requirement for commercial lenders. ECB President Mario Draghi told the European Parliament the downside risks to Europe's economic outlook had increased and the European Central Bank would ensure inflation does not undershoot its target as well as exceed it. The market's retreat suggested investors wanted further guidance from policymakers about their plans to help resolve the region's debt crisis. "There's relief with the coordinated bank action, but people are now asking why have they done it. You can trade into it, but you will probably sell out of it," said Justin Urquhart Stewart, director at Seven Investment Management. "That sort of enthusiasm just shows how much pent-up frustration there is. There's a huge amount of value there, if you're a bit more confident. But we would also have to see a follow-through (action on the euro zone debt crisis) at the EU meeting next week." Miners were among those giving back strong gains from the previous session when they were boosted by top metals consumer China's action to cut bank reserve requirement ratio by 50 basis points to ease credit strains. The STOXX Europe 600 Basic Resources Index fell 1.1 percent. The pan-European index is up more than 7 percent this week, with the rally helping to cut its losses for the month of November to just 1.4 percent. But it is down more than 12 percent in 2011, as the euro zone crisis and worries about economies falling into recession take their toll on investor sentiment. "We think in the near term the (European) market has further to fall as recession is further priced in and earnings downgrades accelerate," said Goldman Sachs in a note. Goldman said it expects profits to fall by 10 percent in 2012, compared with a consensus of a 9.6 percent increase. It forecasts a profit recovery of 14 percent for 2013, and given this, it expects the market to recover some time in the first half of 2012 with indexes ending the year up about 10 percent on current levels. "The timing of this rebound, however, is difficult to predict as it is partly dependent on policy developments," Goldman said.