European shares dented by U.S. data, earnings

Thu Apr 18, 2013 12:41pm EDT

* FTSEurofirst 300 edge lower

* Earnings concerns hit banks

* Sodexo, Nokia fall after earnings lag

* Vodafone boosted by Verizon stake talk

By David Brett

LONDON, April 18 (Reuters) - European indexes pared gains to close slightly lower on Thursday after more weak corporate and economic data in the United States and Europe heightened fears over the growth outlook.

The FTSEurofirst 300 closed down 0.03 percent at 1,147.38 points, having fallen from a session high of 1,154.62, to post its fifth straight day of falls and take its second-quarter decline to 3.5 percent.

Banks were the worst-hit sector, down 1.1 percent, with French bank Societe Generale among the top fallers, down 3.5 percent. Traders cited weak results from U.S. peer Morgan Stanley as contributing to the decline.

That followed forecast-lagging earnings from European firms including Sodexo and Nokia, down 9.6 percent and 8.3 percent, respectively.

Overall, STOXX Europe 600 companies are set to undershoot first quarter earnings expectations by 3.9 percent, according to Thomson Reuters StarMine.

"We're going into this earnings season with very low expectations. That's not a problem in and of itself, it's how much better or worse we do than that," Daniel Morris, market strategist at JPMorgan Asset Management, said.

Sentiment was further bruised after several U.S. economic data releases came in weaker than expected - fresh concern for those investors looking for U.S. growth to help support earnings and offset weakness in Europe.

The earnings news was not all bad, however, with the world's largest maker of crop chemicals, Syngenta AG, up 3 percent on solid first-quarter sales to help the chemicals sector outperform, up 0.6 percent.

Adding most points to the index was GlaxoSmithKline, which gained 3.2 percent in heavy volume after the potentially earnings-enhancing news that a U.S. panel had recommended approval of its new lung drug, Breo Ellipta.

That helped it add most points to the FTSEurofirst 300 in volume nearly 2-1/2 times its 90-day daily average.

Fellow defensive heavyweight Vodafone also lent its support, up 3 percent after comments from U.S. joint venture partner Verizon buoyed those hoping Vodafone may exit its stake.

Despite a smattering of deals in recent months, mergers and acquisitions activity in Europe remains subdued as the growth outlook continues to dent confidence and prevent corporates parting with their cash piles.

"If we have a small recovery in Europe, a stabilisation of the banking system and better numbers in terms of economic growth, the M&A picture might change," Sophie Elkrief, Deputy Head of Alternative Investments at Dexia Asset Management, said.