(updates with closing levels)
* FTSEurofirst 300 down 0.6 pct, retreats from near seven-yr high
* Stocks trim losses after Draghi says ready to use more tools
* Air France sinks as union rejects proposal to end strike
By Blaise Robinson and Atul Prakash
PARIS/LONDON, Sept 22 (Reuters) - European shares fell on Monday, with a benchmark index retreating from the previous session’s near-seven-year high, as concern over the pace of growth in China knocked down mining heavyweights such as Rio Tinto and BHP Billiton.
Shares in Air France-KLM sank 5.2 percent after the main French pilots union rejected a management proposal for ending a week-old Air France strike. The company said the strike was costing it as much as 20 million euros ($25.7 million) a day.
UK supermarket chain Tesco also featured among Europe’s top losers, tumbling 11.6 percent after the group slashed its earnings forecast - its third warning this year - after finding a fault in its accounts.
Shares in Tesco’s rivals also took a beating, with J. Sainsbury down 1.9 percent and Morrisons down 1.7 percent.
“Tesco has dealt investors a severe blow to confidence, with fellow food retailers also suffering,” Keith Bowman, equity analyst at Hargreaves Lansdown, said.
“Concerns regarding China, comments from the finance minister and whether additional economic stimulus will be applied also appear to be hitting investor sentiment.”
Mining companies were by far the biggest drag on the market, with the STOXX 600 Europe basic resources index down 3 percent, hurt by concern over demand before this week’s manufacturing data from top metal consumer China, which is expected to show factory growth is stalling.
Shares in Rio fell 3.8 percent and BHP Billiton lost 3.5 percent, falling along with prices for such metals as copper, nickel, zinc and aluminium.
Iron ore prices also tumbled, plagued by worries about excess supply. Spot iron ore prices have tumbled by nearly 40 percent this year, sparking speculation that big London-listed mining companies will have to slash their dividends.
On Sunday, Chinese Finance Minister Lou Jiwei said the country will not dramatically alter its economic policy because of any one economic indicator, in remarks that came after many economists lowered growth forecasts after seeing the latest set of weak data.
“News out of China where finance minister Lou poured cold water on hopes that China will take further measures to boost its economy is souring sentiment for stocks,” Markus Huber, a senior analyst at Peregrine & Black, said.
The FTSEurofirst 300 index of top European shares ended down 0.6 percent at 1,393.54 points. The index had climbed to near a seven-year high on Friday after Scotland voted against independence.
The index briefly trimmed its losses in afternoon trading after European Central Bank President Mario Draghi said the ECB stands ready to use additional unconventional tools to spur inflation and growth in the euro zone.
Speaking to the economic and monetary affairs committee of the European parliament, Draghi said the euro zone central bank’s Governing Council “remains fully determined to counter risks to the medium-term outlook for inflation”.
Demand was lower than expected last week for the ECB’s first offering of new long-term loans to banks, part of a stimulus programme aimed at increasing lending to companies within the euro zone. That heightened expectations the ECB will eventually have to undertake asset purchases with new money, the process called quantitative easing.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today’s European research round-up (Editing by Larry King and Toby Chopra)