European shares fall early; Rio surges on M&A news
* FTSEurofirst 300 down 0.7 pct, reverses two-day rebound
* Grim German data fuels worries over economic outlook
* Rio jumps after rejects merger approach by Glencore
By Blaise Robinson
PARIS, Oct 7 (Reuters) - European shares fell in early trade on Tuesday after German industrial output fell far more than expected, but losses were limited by gains in mining shares after Rio Tinto rejected a merger approach from rival Glencore.
At 0755 GMT, the FTSEurofirst 300 index of top European shares was down 0.7 percent at 1,341.44 points. The benchmark index had gained 1.1 percent over the past two sessions.
"Volatility has surged again in Europe, but there's no clear trend in terms of direction," Aurel BGC analyst Gerard Sagnier said. "It's better to move to the sidelines for now. Investors need to be patient, the bullish trend will resume at some point."
Bucking the market, Rio Tinto surged 5.5 percent after it said it had rejected a merger approach from smaller rival Glencore that would create a $160 billion mining and trading giant.
The news sparked hopes of consolidation in the basic resources sector, recently hurt by a slump in metal prices including iron ore, which has hit five-year lows. The STOXX basic resources sector index has lost 12 percent since late July. Continuación...