Total leads European shares lower on Russia worries

Wed Jul 30, 2014 4:06am EDT

* FTSEurofirst 300 down 0.2 pct

* Total stock hit by worries over Russia investment

* Peugeot jumps after posting positive results

* So far, 58 pct of companies meet or beat forecasts

* Investors await U.S. GDP, Fed statement

By Blaise Robinson

PARIS, July 30 (Reuters) - European stocks dipped on Wednesday, with shares in oil major Total falling on worries over its investments in Russia and after posting a drop in profits.

Shares in the French group, one of the top foreign investors in Russia, dropped 3 percent after saying that it stopped buying shares in Russia's Novatek the day of the downing of a Malaysia Airlines flight over Ukraine.

Last April, Total forecast that Russia would become its biggest source of oil and gas output by 2020 thanks to its partnership with Novatek and their Yamal LNG project in Siberia.

The European Union and the United States on Tuesday announced further sanctions against Russia, targeting its energy, banking and defence sectors in the strongest international action yet over Moscow's support for rebels in eastern Ukraine.

By 0749 GMT, the FTSEurofirst 300 index of top European shares was down 0.2 percent at 1,370.92 points, after gaining 0.3 percent on Tuesday.

Investors awaited U.S. growth figures for the second quarter, due at 1230 GMT, as well as the conclusion of the U.S. Federal Reserve's two-day policy meeting and its statement set to be released at 1800 GMT.

Analysts polled by Reuters expect the U.S. economy to have grown at an annualised rate of 3.0 percent in the second quarter, turning around from a 2.9 percent contraction in the first three months of the year, due in part to a harsh winter.

The Fed, meanwhile, is all but certain to cut its monthly bond-buying programme by another $10 billion.

"People are getting nervous about the impact of the end of the quantitative easing programme on the equity market," FXCM analyst Vincent Ganne said.

"The end of the first quantitative easing programme triggered a sharp correction on the market. It's more gradual this time, but overall equities could suffer outflows in the next months."

Around Europe, UK's FTSE 100 index was down 0.1 percent, Germany's DAX index down 0.1 percent, and France's CAC 40 down 0.4 percent.

Bucking the trend, shares in aerospace group Airbus surged 3.8 percent after reporting first-half underlying operating profit up 10 percent and reaffirming its forecasts.

KPN rose 4.3 percent after the Dutch telecoms group reported better-than-expected second-quarter core profit, helped in part by cost cuts.

Peugeot surged 6.7 percent after the carmaker posted the first positive contribution from its core auto division in three years.

"Good quarterly results for Peugeot, and very good free cash flow generation," a Paris-based trader said.

According to Thomson Reuters StarMine data, about 35 percent of STOXX Europe 600 companies have reported results so far in the earnings season, of which 58 percent have met or beaten profit forecast.

On average, quarterly profits are up 6.9 percent year-over-year, data shows, fuelling hopes of a long-awaited recovery in European profits this year.

Europe bourses in 2014: link.reuters.com/pap87v

Asset performance in 2014: link.reuters.com/gap87v

Today's European research round-up (Editing by Louise Ireland)

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