* FTSEurofirst 300 down 0.3 pct
* Still on track for 3rd week of gains
* AXA, Renault, Schneider join list of companies hit by FX
By Toni Vorobyova
LONDON, Oct 25 European shares steadied on
Friday after a growing list of companies reported earnings hit
by an adverse exchange rate, prompting investors to lock in
profits at the end of a third straight week of market gains.
A strong euro hit sales at French insurer AXA and
carmaker Renault, while prompting electrical gear
maker Schneider Electric to lower its full year
The euro has risen to 2-year highs on a trade-weighted
basis, with the currency strength making it harder for European
exporters to compete on price, as well as reducing the domestic
currency value of their foreign earnings.
Weak earnings also weighed on home appliances maker
Electrolux and truckmaker Volvo, down 5.6
and 5.3 percent respectively.
"The weakness of emerging currencies which we experienced in
the summer is clearly impacting earnings right now, because you
have a lot of guidance downgraded. It's the big issue for this
earnings season," said Benoit Peloille, investment strategist at
"That's why we continue to push a value strategy oriented on
domestic stocks that are more reliant on the euro zone trend
rather than on growth stocks which are exposed to emerging
countries. These stocks have benefited from premium valuations
... so they are the most in danger."
Investors have been counting on a pick-up in earnings to
become the next driver of equity market gains, taking over from
central bank stimulus. However, despite some bright spots, the
latest results season suggests the recovery has not yet
happened, with some 43 percent of the companies to have reported
so far missing earnings expectations, according to StarMine.
The FTSEurofirst 300 was down 0.3 percent at 1,281.68 points
by 0728 GMY, holding some 10 points below the 5-year highs hit
on Tuesday, but still up 0.3 percent on the week.
The correction marked a retreat from overbought territory on
the 7-day relative strength indicator (RSI) for the index.
On the flip side, shares in buildings material supplier
Saint Gobain rose 3 percent as stabilisation in its
European markets and solid demand in other regions offset any
negative currency impact.
"Earnings-wise, it's been a very mixed bag. If anyone misses,
they get hit at the moment," said Terry Torrison, managing
director at Monaco-based McLaren Securities.
"I think we have to have a breather before we go higher
again. We're looking overbought in the short-term but I'm still
bullish going into the end of the year," he added.