* FTSEurofirst 300 index falls 0.3 percent
* Poor earnings outlook hurts sentiment
* Index seen range-bound, uptrend intact
By Atul Prakash
LONDON, Oct 12 European shares fell onn Friday
morning and looked set to end the week in negative territory but
analysts said the market was not likely to witness a sharp
Traders said they are still concerned over the quality of
third quarter earnings reports and Spain's hesitance to seek a
The FTSEurofirst 300 index has been hovering in a
band of about 50 points in the past two months, against around
100 points in June and July. At 0838 GMT, the index was down 0.3
percent at 1,095.73 points.
"It's not going to be a great earnings season but there are
good reasons not to be too worried about it. I think
disappointments will be contained to some degree on the basis
that labour costs have been falling and expectations have been
lowered quite considerably," Graham Bishop, senior equity
strategist at Exane BNP Paribas, said.
"We think valuations are supportive. We are sticking to our
pro-cyclical bias," he said, adding the market was in a holding
pattern after a good summer run and was looking for catalysts
such as more clarity on the U.S. "fiscal cliff" of spending cuts
and tax rises to break the current trading range.
The earnings season started this week in the United States,
with firms like Chevron and Alcoa disappointing
investors. Alcoa posted a quarterly loss and cut its outlook for
global aluminum demand, citing a slowdown in China. European
earnings releases will pick up in the last week of October.
Shares in European industrial companies fell on concerns
about economic outlook and demand for their goods and services.
The sector index fell 0.8 percent, followed by
technology shares, down 0.7 percent.
Investors have also been trading cautiously following
Spain's hesitation to apply for a bailout that would pave the
way for an intervention by the European Central Bank.
The euro zone's blue chip Euro STOXX fell 0.1
percent to 2,483.94 points. Charts showed the index had
potential to bounce back.
"The uptrend, which has been in place since early June, is
intact and the bias is still to the upside, but the key level to
watch on the upside is 2,600," Tim Parker, technical analyst at
Westhouse Securities, said.
The market tried to break the 2,600 level twice this year
but failed. Parker said that if the index managed to cross the
level, then that would be a very bullish signal and the next
target would be 3,000.
Deutsche Bank strategists advised in a note to buy European
financials, highly-leveraged high yield and domestic exposure
saying: "Now's the time". They said they were returning to being
tactically 'overweight' on the broader STOXX 600 index.
Shares in AkzoNobel fell more than 4 percent to an
11-week low as the Dutch paints maker's Chief Executive Ton
Buechner was still on medical leave, dashing analysts' hopes for
a quick turnaround at the company.