European shares dip early, Volkswagen sinks

Mon Feb 24, 2014 4:03am EST

* FTSEurofirst 300 down 0.1 pct, Euro STOXX 50 flat
    * About 5.6 bln euros wiped off Volkswagen's market cap
    * Worries over Chinese credit restrictions hit miners
    * Europe equity funds see further brisk inflows -EPFR

    By Blaise Robinson
    PARIS, Feb 24 (Reuters) - European shares fell in early
trade on Monday, with Volkswagen sinking in big
volumes after it issued a disappointing 2014 outlook and
unveiled plans to buy out minority shareholders of Scania
.
    Shares in the German carmaker tumbled 6.3 percent while its
luxury brand Porsche was down 5.9 percent.
    The sharp drop in Volkswagen shares wiped about 5.6 billion
euros ($7.7 billion) from the group's market capitalisation.
    After 45 minutes of trading, the volumes of Volkswagen
shares already represented more than the stock's daily average
volume of the past three months.
    "The weak guide for 2014 and the rich bid for Scania will
likely dent sentiment and perpetuate the view that management is
more focused on being big at the expense of shareholder
returns," analysts at Barclays said in a note, cutting their
recommendation on Volkswagen's stock to 'equal weight' from
'overweight'.
    At 0848 GMT, the FTSEurofirst 300 index of top 
European shares was down 0.1 percent at 1,342.32 points, while
the euro zone's blue-chip Euro STOXX 50 index was
flat at 3,132.60 points.
    Worries brewing over credit restrictions on China's property
sector also kept investors on edge. The Shanghai Composite Index
 sank 1.8 percent on Monday to its lowest in two weeks,
knocked by news reports saying Chinese banks had begun
tightening property loans. 
    Mining shares, which have a big exposure to resource-hungry
China, retreated, with Rio Tinto down 1.5 percent and
Anglo American down 1.2 percent.
    Around Europe, UK's FTSE 100 index was down 0.2
percent, Germany's DAX index down 0.1 percent, and
France's CAC 40 up 0.1 percent.
    European stocks had sharply risen over the past 2-1/2 weeks,
with the CAC 40 hitting a 5-1/2 year high on Friday, boosted in
part by hopes of a rebound in corporate profits in Europe in
2014.
    "Resistances are being crossed, and indexes are clearly in a
bullish trend," Aurel BGC chartist Gerard Sagnier said.
    "All the pull-backs we've seen since August have been buying
opportunities to benefit from this powerful medium-term rally,
and the strategy remains the same: keep buying the dips."
    Overall, investors remain positive on European stocks, with
the latest EPFR Global data showing further brisk inflows into
the region. At the country level UK, Spain and Italy equity
funds again enjoyed solid inflows, EPFR said.
    So far this year, Europe equity funds have taken in over $24
billion, versus $5 billion at the same point in 2013. Europe
equity funds have also attracted retail money for the sixth
straight week, the longest such run since late 2006, EPFR said.
    Europe bourses in 2014:Asset performance in 2014:Today's European research round-up
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