* FTSEurofirst 300, ESTOXX 50 dip slightly
* Prospect of weak earnings weighs
* Buy into ESTOXX 50 if it falls to 2,900 -Reyl
By Sudip Kar-Gupta
LONDON, Jan 14 European shares edged lower on
Tuesday as concerns about weak corporate earnings, following a
string of downbeat business updates from U.S. companies, caused
stock markets to dip.
Investors with a longer-term view out towards the end of
2014 said the broader upwards trajectory for European equities
remained intact, but some expected a near-term pullback.
U.S. stock markets and Germany's benchmark DAX
equity index have hit record highs, but some investors are
concerned that further gains will be limited until corporate
earnings start to improve.
U.S. stocks fell sharply on Monday after a number of
mid-sized companies including soda-making group SodaStream
and yogawear chain Lululemon Athletica posted
weak earnings or forecasts.
On Tuesday, German rubber maker Lanxess said it
probably hit its 2013 profit target while UK drugmaker
AstraZeneca forecast a faster return to growth, but
investors were nevertheless nervous about the earnings season.
"There is no room for disappointment in the earnings season
for the first quarter," said Francois Savary, chief investment
officer at Swiss bank Reyl.
The pan-European FTSEurofirst 300 index was down
0.2 percent at 1,322 points in late session trading, while the
euro zone's blue-chip Euro STOXX 50 index fell 0.3
percent to 3,103.37 points.
Germany's DAX, which hit a record high of 9,620.93
points in early January, fell 0.3 percent to 9,481.39 points.
Savary said the Euro STOXX 50 could drop to the 2,900 level
during the first quarter of this year, but added this could be a
good buying opportunity as he expected the index to then recover
and end 2014 at 3,400 points.
Goldman Sachs, in a strategy note this month, said the U.S
S&P 500 index, which has hit record highs, had a "67
percent probability of a 10 percent drawdown during 2014."
Goldman cut its rating on the U.S. equity market to
"underweight" on a three-month basis, but it remained
"overweight" on European equities.
Andreas Clenow, hedge fund trader and principal of
Zurich-based ACIES Asset Management, said investors were getting
nervous in the short term even though the longer-term outlook
was positive, with the global economy slowly recovering.
"I think a lot of people are getting nervous at this point,"
"I don't see an end to the bull market yet, but there is a
high probability of a move down before we then move up."