* FTSEurofirst 300 down 0.2 percent
* H&M surges as Q3 profit rises
* DSM, Colruyt weaken on cautious forecasts
By Tricia Wright
LONDON, Sept 26 European equities fell on
Thursday as concerns over the future of Italy's fragile
governing coalition returned to the fore.
A budget impasse in Washington and a looming battle over the
U.S. debt ceiling also kept investors on edge, with the
FTSEurofirst 300 down 0.2 percent at 1,254.67 points by
Milan's FTSE MIB index was down 1.8 percent,
underperforming other regional benchmarks, as centre-right
deputies supporting Silvio Berlusconi renewed threats to resign
if their leader is expelled from parliament after a tax fraud
Equity strategists said that both the fiscal uncertainty in
Washington and the political situation in Italy would be
contained, and that any market weakness should be used to add to
positions in equities.
"We believe that (in the United States) ... they will come
up with a solution, but that the newsflow between now and then
could be quite negative. In Italy we also believe they will find
a compromise, but it could take a while," said Philippe Gijsels,
head of research at BNP Paribas Fortis Global Markets.
"I still think that we should increase exposure to European
markets, and also to Italy, gradually - nice dips represent
Gijsels highlighted that the FTSE MIB was typically among
the higher beta European indexes, which tend to outperform
rising markets but underperform when markets fall.
Richard Champion, chief investment officer at Sanlam Private
Investments (UK) Ltd, said he aimed to use any market weakness
caused by volatility to increase exposure to equities that he
favours in the longer term, including Nestle and
Investors, otherwise, were left digesting a mixed batch of
corporate results. Swedish fashion firm Hennes & Mauritz
topped the FTSEurofirst 300 gainers' list, up 6.8
percent, after reporting a bigger than expected increase in
pretax profit for its fiscal third quarter.
Cautious outlook statements from Dutch food and chemicals
group DSM and Belgian discount grocer Colruyt
sent their shares down 4.6 percent and 4.1 percent
respectively, the biggest falls on the FTSEurofirst 300.