European stock markets flat as glum outlook weighs

Wed Jul 9, 2014 4:24am EDT

(Updates)

LONDON, July 9 (Reuters) - European stock markets were mixed on Wednesday, regaining some poise after a drop in the previous session, though disappointing trading updates from French caterer Sodexo and U.K. insurer Admiral weighed.

The start of the second-quarter company reporting season began more confidently in the United States where aluminium company Alcoa soundly beat analyst expectations. The slower pace of recovery in Europe, however, has put investors on the defensive.

The pan-European FTSEurofirst 300 index, which has slipped back over the last week after hitting a 6-1/2 year high of 1,399.62 points in late June, edged down 0.1 percent to 1,361.09 points.

The euro zone's blue-chip Euro STOXX 50 index, meanwhile, was up 0.1 percent, recovering some ground after a 1.4 percent fall in the previous session.

The U.K. FTSE 100 index underperformed its European peers, falling 0.4 percent after a trading update from insurer Admiral said the company's six-month revenue had dropped to 1 billion pounds ($1.70 billion). The stock fell 5.5 percent. Rival Aviva also fell after announcing new targets.

French catering, facilities management and vouchers group Sodexo also saw its shares fall more than 3 percent after it said its fourth quarter would be weaker than expected due to the delayed start-up of some major contracts. The group cut its full-year sales growth goal.

Sodexo's note of caution followed a profit warning from Air France-KLM on Tuesday, and concerns about weak corporate earnings have contributed to push back European equity markets down from last month's multi-year highs.

"There are some worries that some company results may not be as strong as expected," said Berkeley Futures associate director Richard Griffiths.

There was more positive news from the U.S. market, however, with aluminium company Alcoa beating analyst expectations for its quarterly results.

Norway's Seadrill was also one of Europe's top performers, jumping 4.9 percent after it canceled the sale of fresh convertible bonds that had proven unpopular with investors.

And data cited by the Financial Times suggested short sellers had further scaled back overall bearish bets that stocks will fall, with the amount of shares out on loan back to their lowest level since the crisis.

Selected short bets, particularly those that depend on a performance gap between two stocks, have made a comeback however, with investors seeking different ways to pick apart the multi-year stock rally in Europe.

($1 = 0.5877 British Pounds) (Reporting by Sudip Kar-Gupta; Editing by Lionel Laurent)

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