European shares steady, Dassault slips on growth warning
* FTSEurofirst 300 steadies in morning trading
* Tech shares lead a sell-off in cyclicals
* Dassault slumps after warning on growth
By Atul Prakash
LONDON, Oct 14 (Reuters) - European shares held steady early on Monday, with investors taking a cautious stance after U.S. politicians failed over the weekend to resolve budget issues and the world's biggest economy moved closer towards a debt default.
Equities had rallied on Friday on expectations a deal to end the fiscal crisis could be reached over the weekend. Senate Majority Leader Harry Reid and Republican leader Mitch McConnell held talks that Reid later called "substantive", but investors were not convinced about an imminent deal.
Figures showing China's exports fell in September also hurt sentiment as the data disappointed investors who were banking on the continuation of recent positive numbers signalling the economy was gaining strength.
"It's a difficult start into the new week, with no real progress to resolve issues related to the U.S. shutdown and debt ceiling and disappointing Chinese exports data hurting sentiment," said Christian Stocker, strategist at UniCredit.
"Investors should focus on the earnings season. I expect a more positive tone from European companies as the economic environment in the region has stabilised in recent months. Equities need an end of the negative earnings revisions and that should happen with a more positive outlook from companies."
Major U.S. companies announcing results this week included Citigroup, Intel, Johnson & Johnson, Yahoo, Bank of America Corp. and Goldman Sachs
. The third-quarter European earnings season will gather momentum in the last week of October.
At 0800 GMT, the FTSEurofirst 300 index of of top European shares was flat at 1,250.46 points after opening lower. It rose in the previous two sessions and is still up more than 10 percent after recent weaknesses.
Cyclical shares were among the top decliners on concerns that any impact of the budget impasse in the United States on its economy and slower growth in China could hurt sectors such as financials, miners and technology.
The STOXX Europe 600 technology index was weakest, down 1.2 percent, led by a 7 percent drop in French software maker Dassault Systemes, which warned that revenue growth will be sharply lower than expected this year due to sluggish orders, especially in Asia.
The auto sector fell 0.7 percent, while construction shares dropped 0.3 percent.
On the positive side, Johnson Matthey rose more than 4 percent to top the list of the FTSEurofirst 300 gainers, with traders citing a note by JP Morgan, in which the bank upgraded its stock to "overweight" from "neutral" and saw a potential upside of 35 percent to the current price.
"Johnson Matthey is at an inflection point. We expect years of investment in the industrial catalyst market to lead to accelerated growth, benefiting from the swathe of new customer capex driven by Chinese petrochemical self-sustainability and the U.S. shale gas revolution," JP Morgan said.