European shares fall as Buffett effect peters out
LONDON (Reuters) - European equities fell on Wednesday, losing steam from the previous session's 3 percent jump, as markets reassessed investor Warren Buffett's offer to reinsure some liabilities of ailing U.S. bond insurers.
Markets punished firms reporting results in line with market estimates, with steel group Arcelor Mittal (MTP.PA) down 3 percent and German industrial conglomerate ThyssenKrupp (TKAG.DE) losing 3 percent.
Bradford & Bingley BB.L slid 11 percent to a record low after unveiling a writedown on its exposure to tarnished assets and carmakers were higher after robust results from Peugeot.
By 4:55 a.m. EST, the pan-European FTSEurofirst 300 index .FTEU3 was 0.3 percent weaker at 1,329.6 points, having fallen earlier by as much as 1.3 percent. The benchmark has lost about 12 percent so far this year.
"The market really doesn't have any conviction," said Dirk Thiels, head of global equity funds at KBC Asset Management. "There is so much uncertainty out there. There is a dark cloud over earnings for 2008."
"Although any significant fall in earnings or slowdown in earnings growth is already discounted in the market, but still there is the uncertainty when earnings start to slow, how far will they go," he said.
The S&P 500 index .SPX ended 0.7 percent higher on Tuesday after earlier rising as much as 1.7 percent.
Equities rose after investor Warren Buffett offered to reinsure $800 billion of U.S. municipal bond risks, easing worries about the insurance sector's fragile health but the momentum failed to carry through to Asia.
MSCI's index of Asian stocks outside Japan .MIAPJ0000PUS edged down 0.2 percent, wiping out earlier gains.
SWEDISH RATE HIKE
Around European markets, London's FTSE 100 .FTSE lost 0.8 percent, Paris's CAC-40 .FCHI shed 0.5 percent and Frankfurt's DAX .GDAXI fell 0.7 percent.
Swedish markets underperformed, with a key index .OMXS30 down 1.3 percent after Sweden's central bank raised its key interest rate by 25 basis points to 4.25 percent, surprising analysts who had expected no change, but the central bank said there may be no further tightening ahead.
British specialist mortgage lender Bradford & Bingley took a 94 million pound writedown on its exposure to tarnished assets and saw other big one-off items derail profits.
It is the latest bank to reveal a big hit after a credit crunch has cut the value of assets in structured vehicles.
Shares in Swiss engineering group ABB (ABBN.VX) fell 9 percent as Chief Executive Fred Kindle quit after a clash over strategy in a shock move amid speculation over his plans for acquisitions.
Among gainers, carmaker Peugeot (PEUP.PA) rose 5 percent as it boosted its thin profit margin.
Shares in Norwegian insurer Storebrand (STB.OL) jumped 11 percent after its fourth-quarter profit beat average estimates in the market and the group announced a policy to pay out more than 35 percent of after-tax profits in dividends.
(Editing by Erica Billingham)
