European share flatline on mixed earnings, economic data

Thu Jan 24, 2013 7:19am EST

* FTSEurofirst flat at midday
    * Apple outlook dents tech stocks
    * Auto stocks slip as French economic worries grow
    * Telcos boosted by Vodafone gains
    * Budget airlines rise after easyJet numbers

    By David Brett
    LONDON, Jan 24 (Reuters) - European shares were little
changed around midday on Thursday as mixed company earnings
coupled with conflicting economic data from the region made
investors wary, with indexes at multi-year highs.
    By 1129 GMT, FTSEurofirst 300 was barely changed at
1,167.87, as the index continued to trade within a tight
10-point range it has held in since climbing to near two-year
highs at the turn of the year.
    "Equities are trading sideways, capped by mixed earnings and
conflicting messages out of Europe," Matt Basi, senior sales
trader at CMC Markets, said.
    PMI business survey data from Germany showed its private
sector expanded at its fastest pace in a year. But in France it
showed a deepening downturn, hitting auto stocks.
 
    "We've seen indices trading through apparent technical
levels, but this is definitely the lowest volume equity bull
market I can remember, and with the VIX (a gauge of
investor stress) bouncing along the bottom, the risk of an
un-protected downside shock remains," he said.
    Tech stocks fell after bellwether Apple's 
revenue outlook missed expectations, knocking one of its major
chip designers ARM down 0.5 percent, and Imagination
Technologies down 1.6 percent.
    Among automakers, leading French manufacturers Renault
 and Peugeot fell 0.7 and 1.2 percent,
respectively, with the sector down 0.7 percent.
    Earlier strong PMI factory data from China provided support
for the basic resources sector and construction and
materials which outperformed the broader index, each
rising 0.3 percent.  
        
    TELCO REBOUND CONTINUES
    Telecoms, having been major laggards in 2012, rose
0.5 percent, continuing their early 2013 bounce.
    Market heavyweight Vodafone provided a large chunk
of the sector's gains, rising 2.4 percent on positive broker
comment and takeover speculation, after the mobile telecoms firm
circulated consensus forecasts to analysts ahead of its
third-quarter trading update due on February 7.
    Goldman Sachs reiterated its "buy" stance but lowered its
medium-term growth expectations and target price.
    Credit Suisse stuck with its "outperform" rating saying
recent bullish guidance for 2013 from Vodafone's U.S. partner
Verizon Wireless partly offset a slowdown in Europe and India.
    Hedge fund manager David Einhorn, whose moves are closely
watched in the markets, told investors this week he recently
added to his position in Vodafone, which owns 45 percent of
Verizon Wireless.
    The head of Verizon Wireless' parent company Verizon
Communications said it might buy Vodafone, a move Einhorn
appeared to endorse.
    Mobile handset maker Nokia, which reported
fourth-quarter results, shed initial gains, falling 1.7 percent
after it axed its annual dividend payment for the first time in
over 20 years to shore up its finances amid a fall in sales.
 
    The travel and leisure sector added 0.5 percent, buoyed by
easyJet, which added 4.7 percent after the budget
airline's quarterly revenue rose 9.2 percent. 
Competitor Ryanair rose 3.6 percent.
    In Europe, 80 percent of companies reporting earnings so far
have either beaten or met expectations, although fourth quarter
earnings have contracted by 0.8 percent year-on-year on average,
according to Thomson Reuters Starmine data.
    Across the Atlantic, a bill to extend the U.S. debt ceiling
temporarily also boosted sentiment, with traders saying a
permanent deal could drive equity indexes through the multi-year
highs they have stalled at. 
    "The ultimate 'risk on' green light for markets would be an
end to the political horse trading in Europe and the U.S.," a
London-based trader said.