European shares declined by midday on Wednesday after rising for six consecutive sessions, as oil major BP (BP.L: Quote, Profile, Research, Stock Buzz) led the energy sector down, while rising German unemployment provided further evidence of economic weakness. At 1201 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.5 percent at 884.84 points after finishing 1.9 percent higher in the previous trading session, its highest close since Nov. 10. The index lost more than 44 percent in 2008, hurt by a credit crisis and several major economies going into recession. The economic calendar this week includes the Bank of England's rate decision on Thursday, and the non-farm payrolls data in the United States on Friday. "January this year is in contrast to last year, when the non-farm data was more of a shock," said Philip Isherwood, strategist at Dresdner Kleinwort. "But now we know more jobs are being lost. "No one will be surprised by the Bank of England cutting rates again on Thursday. They're not doing it for fun. The extraordinary policy response is in proportion to the problem." "Equities will be fine as long as the bonds markets are fine. We need governments to be able to spend, and that requires them to be able to sell their debt. If they don't, governments can't underwrite a recovery, which matters for equity markets." Utilities were among the biggest losers. Shares in Germany's largest utility E.ON (EONGn.DE: Quote, Profile, Research, Stock Buzz) fell 2.9 percent and its peer RWE (RWEG.DE: Quote, Profile, Research, Stock Buzz) dropped 1.9 percent amid concerns of natural gas supply bottlenecks and hurt by easing oil prices. Russian gas supplies to Europe through Ukraine shut down completely on Wednesday, leaving several European Union member states, including Germany, without Russian fuel in freezing mid-winter temperatures. Utilities were further hit by Scottish & Southern Energy (SSE.L: Quote, Profile, Research, Stock Buzz) saying it is to place about 40 million shares to boost its balance sheet, representing up to 5 percent of its capital. Shares in Scottish & Southern slid 7.3 percent while National Grid (NG.L: Quote, Profile, Research, Stock Buzz) was 4.9 percent lower. GDF Suez (GSZ.PA: Quote, Profile, Research, Stock Buzz) fell 1.3 percent. Oil heavyweight BP fell 3.6 percent on market talk the company was telling analysts that its fourth-quarter earnings would be lower than expected, three dealers said. BP declined comment. Some other energy stocks fell as crude CLc1 dipped slightly, but it was still trading at more than $48 a barrel, propped up by tensions in the Middle East and the Russian gas row. Royal Dutch Shell (RDSb.L: Quote, Profile, Research, Stock Buzz), Repsol (REP.MC: Quote, Profile, Research, Stock Buzz) and Statoil (STL.OL: Quote, Profile, Research, Stock Buzz) fell between 0.8 and 1.8 percent. GERMAN UNEMPLOYMENT RISES In macro news, Germany posted its first rise in unemployment in almost three years, a day after the global economic downturn forced U.S. aluminium giant Alcoa (AA.N: Quote, Profile, Research, Stock Buzz) to announce 15,000 job cuts and slash output. Across Europe, the FTSE 100 index .FTSE and Germany's DAX .GDAXI were down 1.3 and 0.7 percent respectively. France's CAC 40 .FCHI was up 0.1 percent. Truck maker Scania (SCVb.ST: Quote, Profile, Research, Stock Buzz) fell 4.4 percent after Germany's Porsche Automobil Holding SE (PSHG_p.DE: Quote, Profile, Research, Stock Buzz) has said it would make a mandatory takeover offer for the company at the lowest level allowed under takeover rules. Marks & Spencer (MKS.L: Quote, Profile, Research, Stock Buzz) shares rose 4.7 percent after Britain's biggest retailer announced weak, but broadly as-expected, third-quarter sales figures. Futures for the Dow Jones DJc1, S&P 500 SPc1 and Nasdaq NDc1 were between 0.5 and 0.6 percent lower. (Additional reporting by Atul Prakash; editing by Hans Peters)

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