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European shares slip, selling pressure resumes

Paris - European shares reversed an early rebound and slipped again on Thursday morning, resuming their month-long sell-off as worries over the strength of the global economy and fears of deflation in the eurozone kept investors on edge.

At 10:20, the FTSEurofirst 300 index of top European shares was down 0.2% at 1 249.39 points, after gaining as much as 1% at the open.

The index sank 3.2% on Wednesday, suffering its biggest one-day slide since late 2011. The slump represented a wipe-off in market value of about $255bn for European stocks listed on the broad STOXX Europe 600 index, more than the gross domestic product (GDP) of Portugal.

"We have a 'sell' position on the market in the short term," Aurel BGC analyst Gerard Sagnier said. "European indexes have confirmed the correction movement. The panic, coupled with stop losses, is exacerbating the pull-back."

Southern European markets were the most hit on Thursday, with Spain's IBEX down 1.4%, Italy's MIB down 1.1% and Portugal's PSI 20 down 1.5%.

The acceleration of the 'risk-off' trade in the last few days was also visible in other asset classes, with investors cutting exposure to the most risky assets, such as Greek bonds.

On Thursday, Greek 10-year government bond yields rose above 8% for the first time since February, driven by worries about Athens' plans to wean itself off international aid and the prospect of early elections. Athens's ATG stock index was down 1.2%, adding to recent sharp losses.

Switzerland's SMI stock index was also down, losing 0.9% after the government cut its economic outlook. Nestle, the world's biggest food group, was down 2.6% after posting disappointing sales figures, dragging on the index.

On Wednesday, Washington renewed a warning that Europe risks falling into a downward spiral of falling wages and prices, saying recent actions by the European Central Bank may not be enough to ward off deflation.

In a semiannual report to Congress, the US Treasury Department also said Berlin could do more to help Europe, namely by boosting demand in the German economy, Europe's largest.

However, a raft of reassuring corporate results helped limit the market's losses on Thursday.

Shares in Swiss drugmaker Roche rose 0.5% after it reaffirmed its full-year sales and profit targets as a strong performance by its new breast cancer drugs helped it beat expectations in the third quarter.

French spirits group Remy Cointreau gained 0.7% after it confirmed full-year targets for organic growth.

Shire featured among the top losers again, down 8.1% and plummeting for a second day, after US pharmaceutical company AbbVie recommended that shareholders vote against its $55bn takeover of Shire in the wake of a US government move to curb deals designed to cut high taxes.

Shares in Shire tumbled 23% on Wednesday after AbbVie said it was reconsidering its bid.

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