European shares retreat, hurt by weak economic data

Thu Feb 14, 2013 7:04am EST

* FTSEurofirst 300 dips 0.4 pct, EuroSTOXX 50 down 0.9 pct
    * Euro zone GDP, ECB comments weigh on sentiment
    * Charts show room for more weakness

    By Toni Vorobyova
    LONDON, Feb 14 (Reuters) - European shares fell on Thursday,
with data showing a deeper-than-expected euro zone recession and
signals the ECB is reluctant to rein in the euro hurting
sentiment.
    The euro zone economy shrank 0.6 percent in the fourth
quarter of 2012, knocking investor confidence in the region's
ability to recover this year. 
    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. 
    Any expectation of intervention from the European Central
Bank were dampened on Thursday, when Vice President Vitor
Constancio said exchange rates should be set by markets.
 
    "Basically what (he is) saying is that the ECB still remains
reluctant to manipulate the euro lower, which suggests to me
that the economic data is going to continue to deteriorate,"
Michael Hewson, analyst at CMC Markets, said.
    The EuroSTOXX 50 fell 0.9 percent to 2,633.53 points
 by 1133 GMT, and technical charts pointed to more
weakness.
    "If this is an ordinary correction the market should fall to
2,509, if not 2,412/27, ... but such a move will also strongly
advocate a more profound correction or even a full-blown
turnaround," analysts at SEB said in a note.
    The broader FTSEurofirst 300 was down 0.4 percent at
1,161.19 points, giving up tentative early morning
gains after the euro zone data and Constancio's comments.
    Heavyweight Nestle was the biggest drag on the
pan-European index, after the food giant warned of a challenging
year ahead, sending its shares down 2.5 percent. 
    Overall, though, Thursday's crop of corporate reports had a
positive tint, with international sales boosting bottom lines.
    Dutch staffing firm Randstad and Swiss engineering
group ABB both beat earnings' forecasts, helped by
growth in Asia and Latin America.
    Shares in Randstad and ABB were both up nearly 5 percent. 
    French spirits group Pernod enjoyed solid growth
in the United States while French car maker Renault 
pledged to increase full-year sales on the back of rising demand
outside Europe, sending its shares up 6.7 percent.
    Pernod shares were 1.8 percent higher.
    "The global macro outlook has been a bit more encouraging,
if you look at the results today you can see companies like
Pernod, which are very global, doing very well," said James
Buckley, head of European equities at Barings Asset Management.
    To-date, 59 percent of STOXX Europe 600 companies that have
already reported results have met or beaten full-year earnings
expectations, compared to 71 percent of their U.S. peers,
according to Thomson Reuters StarMine data.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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