European shares dip on first big earnings day

Thu Jan 31, 2013 5:06am EST

* STOXX Europe 600 down 0.4 percent amid mixed earnings
    * AstraZeneca drops, warns of tough year ahead
    * Ericsson jumps after Q4 results

    By Tricia Wright
    LONDON, Jan 31 (Reuters) - European shares fell on Thursday
as investors digested mixed earnings reports, with a warning
from AstraZeneca knocking its shares while Ericsson surged after
fourth-quarter results.
    The STOXX Europe 600 was down 0.4 percent at 287.44 by 0929
GMT having dropped 0.6 percent in the previous session. 
    But having benefited from a broad shift in investment flows
towards riskier assets, the index remains near two-year highs
and is on course to notch up a near 3 percent rise in January.
    On the first big day of the European earnings season,
heavyweights AstraZeneca and Royal Dutch Shell 
came under pressure after releasing disappointing numbers.
    Ericcson jumped 8 percent on higher-than expected
fourth-quarter core profit and revenue growth, raising hopes the
world's top mobile telecom gear maker is beginning to shake off
the global downturn.
    Trading volume in Ericcson was robust, at 182 percent of its
90-day daily average, against the STOXX Europe 600 on 33 percent
of its average.
    Strategists and fund managers see further scope for gains in
the share market, helped by liquidity support from central banks
alongside an improving global economic outlook.
    "January has been an exceptionally strong month with
especially retail money finally leaving cash and the bond
markets and flowing into equities. Normally when January does
well, so does the whole year so I remain positive," Lex van Dam,
hedge fund manager at Hampstead Capital, which manages around
$500 million of assets.
    Philippe Gijsels, head of research at BNP Paribas Fortis
Global Markets said: "A lot of people are still quite
underinvested... which means that there's quite a bit of money
ready to come to these markets.
    "We have the economic recovery, we have central banks
injecting, and I think this bodes well for further returns this
year."
    AstraZeneca skidded 5.1 lower after Britain's second
biggest drugmaker said it faced a tough 2013, with earnings set
to decline "significantly more than revenue" as operating costs
rise. 
    Trading volume in AstraZeneca stood at 137 percent of its
90-day daily average.
    Oil major Royal Dutch Shell shed 1.3 percent after
fourth-quarter results significantly undershot expectations.
    "Overall, the Q4 results are slightly disappointing but
medium-term growth targets are reconfirmed. We expect downward
revisions to our forecasts for 2013 (currently EPS 477 cents)
and will review our 'hold' recommendation after considering
today's disclosures," Liberum Capital said in a note.
    The broker noted that the shares offer a yield of about 4.8
percent and "robust if unexciting" growth prospects, retaining
its view that Shell remains attractive relative to BP.
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