European shares fall as rate-sensitive utilities tumble, warning hits autos

* Pan-European index down 0.8 pct

* Hawkish Draghi hammers utilities, lifts banks

* Italy’s Carige bucks positive banks on capital worries

* Schaeffler drags autos after profit warning

* Cyber attack hits Maersk, WPP; shares down
(Writes through, adds details, closing prices)

By Danilo Masoni and Kit Rees

MILAN/LONDON June 27 (Reuters) – Hawkish comments from
European Central Bank President Mario Draghi hit interest
rate-sensitive utilities shares on Tuesday, dragging down
European indexes, while a warning from auto parts supplier
Schaeffler hit the whole sector.

Draghi on Tuesday opened the door to tweaks in the bank’s
aggressive stimulus policy, fuelling market expectations the
bank will announce a reduction of stimulus as soon as September.

Utilities, whose constant dividends flows become
less attractive when monetary policy tightens, fell 2.4 percent,
suffering their biggest one day loss since November.

Shares in Spanish power network operator Red Electrica
, Italian gas firm Italgas and German
heavyweight utility E.ON were among the top losers in
Europe with losses of more than 3 percent.

Their losses helped drag the pan-European STOXX 600
index down 0.8 percent.

However shares in banks, which have long suffered from the
ECB’s ultra loose policy, were boosted by Draghi’s remarks with
the euro zone sectoral index ending up 1.4 percent.

“Today Draghi moved his first step towards indicating that
ECB monetary policy will become less accommodative in 2018,”
said UniCredit chief euro zone economist Marco Valli.

“Unless an unexpected shock materialises, a formal tapering
announcement is likely to come at the ECB monetary policy
meeting scheduled on 7 September,” he added.

Shares in banks such as Caixa, Deutsche Bank
, Sabadell and Bankia – which are
more sensitive than others to the rate cycle – were among the
top five euro zone bank gainers, all up over 2.4 percent.

Bankia got an extra boost as investors cheered to its deal
to buy smaller peer BMN in a $924 million deal.

A weak spot among banks was Italy’s Carige which
fell 3.4 percent to a fresh record low on mounting talk the
troubled Genoa-based lender will need more capital than the 450
million euro initially planned to repair its finances.

Autos fell 1.5 percent after German auto parts
supplier Schaeffler slashed its profit guidance on
growing price pressures and high costs. Schaeffler shares
tumbled 12.8 percent.

“Schaeffler flagging increased pricing pressure will almost
definitely raise concerns across the supplier space,” Jefferies
said in a note. “Schaeffler’s profit warning will reignite the
debate on the resilience on supplier margins and organic growth
(post pricing) as we approach the ‘peak’ of the cycle.”

German drugmaker Stada dropped 3 percent after
Bain Capital and Cinven failed to win the required shareholder
acceptances to take over the firm.

Stada, which have rallied nearly 26 percent this year,
however came off earlier lows after Reuters reported that the
private equity groups were discussing a new offer.

A.P. Moller-Maersk the world’s biggest
advertising agency WPP fell 0.5 and 0.8 percent
respectively after falling victim of a global cyber attack.

Gains among mining firms Anglo American,
ArcelorMittal and Rio Tinto helped prop up the
basic resources sector.
(Editing by Jeremy Gaunt)