European shares knocked by weak EU growth data

Thu Feb 14, 2013 12:26pm EST

* FTSEurofirst down 0.2 percent

* Weak European growth dents sentiment

* Vodafone leads telecoms lower

* M&A lifts AB Inbev and Aberdeen Asset MGT

By David Brett

LONDON, Feb 14 (Reuters) - European shares ended lower on Thursday after investor sentiment was hit by weak regional growth data, although a bounce off technical support and some solid U.S. data helped indexes close off their lows.

The FTSEurofirst 300 closed down 2.02 points at 1,164.22, hovering around 12 points off 2-year highs, while a leading euro zone blue-chip index closed down 0.8 percent at 2.635.35.

European shares weakened after data showed the euro zone economy shrank 0.6 percent in the fourth quarter of 2012, but pared losses late after bullish jobs data in the U.S. sparked a recovery on Wall Street.

Wall Street edged back towards 5-year highs, while in Europe the Euro STOXX 50 found strong support at 2,600 both from prior peaks and the uptrend line from its 2012 low.

"Mixed economic data created uncertainty and we have had a lot of uptrends extending so it is only natural to see a little bit of caution, but there is some solid support preventing a sharper retracement" Dominic Hawker, technical strategist at Messels, said

Telecoms were among the worst performers with the sector dogged by concern over earnings and dividends.

Heavyweight mobile giant Vodafone fell 2.4 percent, extending recent losses, on the back of the company's prospective purchase of Kable Deutschland, which has raised questions over the company's leverage and dividend outlook, according to analysts.

Dutch telecoms group KPN fell 0.7 percent and paring recent gains, which came on the back of takeover rumours. Another rumoured takeover target miner ENRC, down 0.8 percent, also edged back from recent highs.

Anheuser-Busch InBev, however, rose 5.9 percent after the world's largest brewer revised the terms of its $20.1 billion takeover of Mexican brewer Grupo Modelo to overcome U.S. objections.

While investors cheered British fund manager Aberdeen Asset Management, up 2.5 percent, after the firm unveiled two acquisitions.

"A lot of companies, fearing about the systemic risk, have been delaying investments for a long time. But now that this risk is gone, you could well see a sudden catch up in capital expenditures as the companies put their cash to work," Gilles Guibout, head of euro zone equities at AXA Investment Managers, which has 554 billion euros ($739 billion) under management.

SEEKING GROWTH

With domestic demand weak, European companies have been looking abroad for profit growth, but that is now starting to be eroded by the strong euro exchange rate EUR=.

Dutch staffing firm Randstad, Swiss engineering group ABB, French car marker Renault and drinks giant Pernod Ricard climbed as much as 7.7 percent after all four firms reported solid growth outside Europe.

But cruise ship operator Carnival fell 2.9 percent after flagging earnings would be knocked up to 10 cents a share by the impact of voyage disruptions and related repair costs, prompting Oriel to cut its forecasts.

Pharmaceutical company Shire fell 5.5 percent, hit by profit taking after reporting a rise fourth-quarter earnings.

"It looks like a few people got long into the stock on the back of the AstraZeneca bid stories earlier in the week," a London-based trader said.

And British engineering firm AMEC fell 7.3 percent with investors worried about the company's modest growth outlook despite it posting better than expected profits for 2012 and hiking its dividend by 20 percent.

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