European stocks trim losses slightly on ECB rise

LONDON, June 8 (Reuters) European shares trimmed heavy losses slightly on Thursday after the European Central Bank raised its key interest rate by 25 basis points to 2.75 percent.

The move was widely expected although some market players had thought the ECB could opt for a 50 basis point rise.

''This is what was expected and this is a reasonable decision.

Fifty basis points would have been very bad news. We are now waiting for (ECB President Jean-Claude) Trichet's comments that will tell us is the ECB is still tempted to accelerate the tightening move, with maybe another 25-point rise in July,'' said Veronique Riches-Flores, economist at Societe Generale.

By 1155 GMT, the FTSEurofirst 300 index of top European shares was down 2 percent at 1,263.57 having been at 1,262.5 before the announcement.

Worries over rising rates and a potential economic slowdown has led the benchmark to lose around 10 percent, its gains for the year, since hitting a near-five year high of 1,407.5 on May 11 on upbeat corporate growth.

Around Europe, Germany's DAX was 2 percent down, France's CAC 40 was 1.8 percent weaker and other national bourses were also down similar amounts.

REUTERS VJ BD1904