European shares edge down on Spain, growth concerns

Wed Oct 3, 2012 12:35pm EDT

* FTSEurofirst down 0.1 percent
    * Investors cut exposure to banks and miners
    * PMIs highlight bleak economic outlook
    * Gecina falls as 2 owners file for bankruptcy

    By David Brett
    LONDON, Oct 3 (Reuters) - European shares edged lower on
Wednesday on concerns about Spain, the focal point of the
regional debt crisis, and slowing global growth, with indexes
keeping to recent tight trading ranges.
    The FTSEurofirst closed down 1.05 points, or 0.1
percent, at 1,100.84 as the index remained locked in a 30-point
range established in mid-September, when the European summer
rally on the back of central bank stimulus came to a halt.
    The onus is now on politicians to follow the leads set by
central banks. As the market waits for Spain to request a
bailout, investors have remained reluctant to commit further to
equities. 
    "The reality is the Spanish situation is still problematic,
and until (Prime Minister) Mariano Rajoy goes and asks for the
bailout, they can not activate the bond-buying programme, so we
are all just waiting," Andrea Williams, European fund manager at
Royal London Asset Management, said.
    Williams has been cutting her exposure to euro zone banks,
given the weak growth outlook.
    "There is a sense that focus is now back on the politicians
and the macro picture, which is not getting any easier," she
said.
    French property company Gecina slipped 4.6 percent
after two Spanish investment firms that own 31 percent filed one
of the biggest bankruptcy actions in Spain's history after they
failed to get refinancing for a 1.6 billion euro ($2.1 billion)
loan. 
    Investors continued to reduce exposure to banks,
which have fallen 3 percent over the past five days. Miners
 fell too, hamstrung by global growth worries.
    The latest global purchasing managers indexes (PMIs)
suggested aggressive actions taken by central banks over the
last two months have yet to convince consumers to start spending
again. 
    U.S. data showed that the pace of growth in the services
sector picked up in September as new orders accelerated, though
employment, a vital component to a sustained recovery, cooled.
 
    
    MACRO BLUES
    The reluctance of consumers and corporations to start
spending was reflected in company updates. 
    Britain's biggest retailer, Tesco, shed 2.6 percent
as it paid the price for halting its declining sales with a drop
in profits of more than 10 percent in the first half, the first
decline in 20 years. 
    French peer Carrefour fell 1.4 percent.
    Support and outsourcing service provider Capita shed
1.6 percent in heavy trading volumes as revenues took a knock
after the company lost a contract with the British government.
 
    Energy shares were among the top losers, falling along with
oil prices on mounting worries over global demand, with Total
 down 0.8 percent and Repsol down 0.9 percent.
    Around Europe, the major indexes such as the UK's FTSE 100
index and Germany's DAX index were little
changed, stuck in their recent ranges, while Spain's IBEX
 fell 0.5 percent.
    The blue chip Euro STOXX 50 index was flat at
2,492.48 points, slipping back below a key support level at
2,495.66 - the 23.6 percent Fibonacci retracement of the 'Draghi
effect' rally started in late July.
    "A downward channel is taking shape," Aurel BGC chartist
Gerard Sagnier said. 
    "The index could retrace another 4 to 5 percent of the
summer rally. We have a 'reduce' recommendation on the short
term, and people should take advantage of the technical
rebounds," he said.
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