* FTSEurofirst 300 falls 0.2 pct
* Defensive sectors continue outperformance
* European earnings outshine Wall Street
By Alistair Smout
EDINBURGH, May 21 (Reuters) - European shares fell in earlydeals on Wednesday, dropping further away from last week's 2014highs, led down by BNP Paribas (Milan: BNP.MI - news) after it was reported that U.S.authorities are seeking to fine the bank.
BNP Paribas fell 2 percent, a top faller on the pan-EuropeanFTSEurofirst 300, after Bloomberg reported that U.S.authorities are seeking more than $5 billion from the Frenchbank as a settlement over its dealings with sanctionedcountries.
Bank of America Merrill Lynch describes the fine as "clearlya negative," adding that it could affect the bank's dividend.
The bank accounted for over a third of the 0.3 percent dropon France's blue chip CAC 40 index.
The FTSEurofirst 300 fell 0.2 percent to 1,354.30 points,taking falls for the week to 0.6 percent.
The index is now 1.4 percent off the 2014 peak hit lastThursday, which was the highest level for the index since May2008.
The market was led lower by risk-sensitive sectors such asbasic resources and banks, which suffered asoptimism deteriorated after poor sessions in the United Statesand Asia.
Defensive sectors such as utilities, up 2.3 percentso far this month, continued their recent run of outperformanceagainst a broader STOXX 600 index, which has managedonly a flat showing in May.
"We have a slight bearish bias in this market because sectorrotation, both in the US and in Europe, shows that investors aremoving back into defensive sectors, which usually happens alittle ahead of the end of the bull market," Valerie Gastaldy,head of technical analysis firm Day-By-Day, said.
"But we need price signals to call for a clear downtrend,and we do not have them yet."
The weak session on Wall Street was prompted by poorearnings, although on Wednesday, European reports were generallyat least in line with expectations.
Danish shipping and oil group A.P. Moller-Maersk rose 3.1 percent, the top FTSEurofirst 300 riser,after reporting a first-quarter net profit above forecast.
Europe bourses in 2014: http://link.reuters.com/pap87v
Asset performance in 2014: http://link.reuters.com/gap87v
Today's European research round-up (Editing by Toby Chopra)
- Europe News
- BNP Paribas