* FTSEurofirst 300 edges down 0.1 pct
* FTSE 100, DAX and CAC all slip lower
* Weak euro zone data weighs
* RBS falls on report of new fines
By Lionel Laurent
LONDON, Jan 2 (Reuters) - A modest New Year rally in European stocks quickly fizzled out on Friday after disappointing euro zone manufacturing data.
The pan-European FTSEurofirst 300 index slipped 0.1 percent to 1,367.52 points by midsession and early gains on benchmark indexes in France, Germany and Britain all ebbed away.
Euro zone manufacturing ended 2014 on a subdued note as output, new orders and employment all recorded sluggish growth, a survey showed on Friday, adding to pressure on the European Central Bank (ECB) to boost the economy.
The downturn also deepened in France, the euro zone’s second-biggest economy, while data also showed a weaker-than-expected reading for the British manufacturing sector.
Germany’s DAX fell 0.7 percent, France’s CAC was down by 0.1 percent while Britain’s FTSE 100 also retreated 0.1 percent.
ECB President Mario Draghi reiterated in a German newspaper interview that the bank was ready to take new economic stimulus measures, such as buying government bonds in a process known as “quantitative easing” (QE), to boost the region’s economy.
However, dealers said the weak economic backdrop, coupled with uncertainty over Greek elections later this month, were putting investors off taking big positions in European stocks.
“Even with ECB President Draghi signalling the ever-increasing likelihood of QE at some point this year, the DAX and other European markets have failed to eschew the bearish sentiment that marred the end to last year,” said Spreadex financial analyst Connor Campbell.
One of the worst-performing European stocks was Royal Bank of Scotland, which fell 2.3 percent after The Times newspaper reported it might face fines over the sale of toxic mortgage-backed debt in the U.S. of more than 5 billion pounds ($7.76 billion). RBS declined to comment.
Elsewhere, BG Group shares rose after it received a $350 million payment from Egypt.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today’s European research round-up (Additional reporting by Sudip Kar-Gupta; Editing by Louise Ireland)