European shares down as weak commodity stocks offset Telecom, Bayer gains

LONDON/MILAN: European shares were lower on Monday with weaker commodity stocks more than offsetting gains in Bayer and Telecom Italia .

The pan-European FTSEurofirst 300 index was down 0.5 percent by 1449 GMT, while the euro zone's blue-chip Euro STOXX 50 index was down by 0.6 percent.

Telecom Italia rose 3.3 percent, among the top gainers on the FTSEurofirst, after the company confirmed its CEO was stepping down in a move seen as a sign of the growing influence of top shareholder Vivendi.

Italian broker ICBPI said the resignation could fuel speculation about new cost-cutting at the Italian phone group.

Bayer's shares rose 3.2 percent after people familiar with the matter told Reuters that Monsanto, the world's largest seed producer, had approached Bayer to express interest in its crop science unit, including a potential acquisition worth more than $30 billion.

Mining and steel stocks such as ArcelorMittal and Glencore fell as metals prices steadied after reaching a four-month high in the previous session.

Softer oil prices also weighed on the shares of energy companies, while Tullow Oil was further impacted by a downgrade from investment bank Jefferies.

Shares in Italy's Banco Popolare rose 2.7 percent after its CEO said the bank and its rival Popolare di Milano were getting closer to meeting the conditions set by the European Central Bank for clearing a possible merger. Popolare di Milano was up more than 2 percent.

Some strategists remained cautious on the outlook for European stocks. JP Morgan Cazenove downgraded euro zone equities to "neutral" from "overweight", citing headwinds on the region's stock markets from a weakening in the U.S dollar.

"We reiterate our recent downgrade of Japan, and also downgrade Eurozone, from overweight to neutral. The region is still a crowded 'long', valuations are uninspiring, Euro is a headwind and ECB (European Central Bank) action is behind us," said JP Morgan strategist Mislav Matejka.

The FTSEurofirst 300 index remains down by around 7 percent since the start of 2016.