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* Bayer falls 5%, biggest drag on STOXX 600
* Stocks give up some of previous session's gains
* Micro Focus slips on bleak forecast
* Italian banks UBI and Intesa slip in takeover battle
(Updates with closing prices)
By Sruthi Shankar and Susan Mathew
July 7 (Reuters) - European shares fell on Tuesday as
surging U.S. coronavirus cases and forecasts for a
deeper-than-feared recession in the euro zone dimmed optimism
around a post-pandemic rebound.
The pan-European STOXX 600 index slipped 0.6%,
falling back from a near one-month high.
The banking sector, which had risen 4% in the
previous session tracking a global rally, fell by 1.4%, while
real estate, technology and telecoms
shares each dropped between 1% and 1.8%.
German drugs and pesticides maker Bayer slumped
5% after a U.S. judge questioned a long-negotiated settlement of
lawsuits relating to its weedkiller Roundup.
As the economic impacts of the coronavirus crisis continue
to be felt, the European Commission said the 19 nation single
currency area would contract by a record 8.7% before rising by
6.1% in 2021, worse than its previous forecast.
Several U.S. states posted record daily coronavirus case
counts, prompting many to reverse reopening plans as the U.S.
death toll topped 130,000.
"Renewed coronavirus outbreaks in some parts of the world...
supports our cautious stance and adds to downside risks for the
advanced economies in particular," said Jennifer McKeown, head
of the global economics service at Capital Economics.
"Even if the authorities continue to shun draconian
restrictions, people may choose to avoid many types of economic
activity."
London's FTSE 100 was down 1.5% as the pound
rose to three-week highs on optimism that British and EU trade
negotiators could find common ground.
The market focus will also be on signs of progress from
talks this week in Brussels on a European recovery fund, which
investors hope will be provided in part as grants, as proposed
by the European Union.
Bleak forecasts for the rest of year saw Micro Focus
, slide 19.6%, while French catering and food services
group Sodexo dropped 4.1%.
Surging copper and iron ore prices saw Rio Tinto
rise 0.4%.
Italy's UBI Banca and Intesa Sanpaolo both
fell amid an increasingly bitter takeover battle, with UBI
reiterating that Intesa's bid does not adequately reward
shareholders in the smaller bank.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Anil
D'Silva and Alexander Smith)
