* FTSEurofirst 300 has weakest close since Dec. 31, 2012
* Euro STOXX 50 finishes at weakest since Nov. 28, 2012
* Traders cite concerns German economy may weaken
* Most traders expect further falls in April and May
By Sudip Kar-Gupta
LONDON, April 17 European shares fell to their
lowest levels so far this year on Wednesday on fresh concerns
over the global economy that led some to expect more weakness in
the near term.
The pan-European FTSEurofirst 300 index closed down
1.6 percent at 1,147.76 points - its fourth consecutive session
of losses and its lowest finish since 1,133.96 points on Dec.
The euro zone's blue-chip Euro STOXX 50 index
also retreated 2.1 percent to 2,553.49 points, its worst close
since ending at 2,546.84 points on Nov. 28.
Traders speculated that the German economy, which has shown
some resilience to the euro zone's sovereign debt crisis, could
weaken. This added to bearish sentiment after the International
Monetary Fund trimmed its forecast for the global economy on
"The tone's pretty bearish," said XBZ European equity
options broker Mike Turner.
Turner said clients had taken "put" options - used to bet on
a future market fall - on the Euro STOXX 50 with strike prices
of 2,500 and 2,400 points due to expire in May, implying some
investors felt the index could fall to that level by then.
TECHNICAL WEAKNESS LOOMS
Turner said that if the Euro STOXX 50 futures contract
fell below 2,491, it could herald a sharper sell-off
over the course of April.
"If we break it, we could see a more aggressive sell-off
down to 2,400," he said.
The Euro STOXX 50 index also briefly fell below its 200-day
simple moving average level of around 2,547 points, which some
technical traders said could herald more near-term weakness.
Tullow Oil was the worst-performing FTSEurofirst 300
stock, slumping 9 percent and dragging down other energy stocks
such as Total after disappointing results from a well
in offshore French Guiana.
However, aerospace group EADS bucked the weaker
markets to rise 4.9 percent to the top of the FTSEurofirst 300,
after stating it planned to buy up to 43 million of its own
shares, while investors also welcomed German car maker Daimler's
plans to sell its stake in EADS.
Although the majority of investors expect European equity
markets to decline during the second quarter after rising from
January to March, many still expect the region's stock markets
to advance gradually over the course of the year.
A Reuters poll last month showed that fund managers and
analysts expected the Euro STOXX 50 to rise to 2,935 points by
the end of December, with equities due to eke out gradual gains
as the global economy continues a recovery from the 2008
Richard Lacaille, chief investment officer at State Street
Global Advisors, said euro zone equities were attractively
valued and currently his top trade.
According to Thomson Reuters Starmine data, the pan-European
STOXX 600 index currently has an average
price-to-earnings ratio for the next 12 months of 12.1 - a
cheaper multiple than the 13.8 ratio for the U.S. S&P 500 index
Yet Cyrille Urfer, chief investment officer at Swiss bank
Gonet, felt it was better to err on the side of caution for now
and look to sell shares which had risen since the start of 2013
for a profit.
"We've taken some profits on equities and raised a bit of
cash. We're positioning ourselves for 'sell in May and go
away'," he said.