* Spain's IBEX down 2.8 pct on exposure to Latin America
* FTSEurofirst 300 falls 1.4 pct, heads for weekly loss
* Aberdeen Asset Management, Mapfre fall 5 pct
* European volatility index hits 3 month high
By Atul Prakash
LONDON, Jan 24 Spanish equities slipped on
Friday and headed for their worst weekly show in a year, with a
rout in Latin American currencies promoting investors to trim
their bets on the country that is heavily exposed to the region.
Spanish insurer Mapfre and London-listed Aberdeen
Asset Management, which have heavy presence in emerging
markets, fell about 5 percent after Argentina's central bank
abandoned its policy of supporting the local currency by
intervening in the foreign exchange market.
"We are seeing widening deficits in the whole of Latin
America and Spain is much more exposed to that than any other
European country," said James Butterfill, global equity
strategist at Coutts, adding Spain has a 37 percent revenue
exposure to Latin America, against 5 percent for Europe.
"Further declines in Latin American currencies could lead to
more earnings weaknesses in countries such as Spain."
The currency crisis took its toll on Spanish stocks, with
the country's benchmark IBEX index falling 2.8 percent
to a two-week low, the worst daily performance in 5 months. It
was down more than 5 percent this week and stayed on track for
the worst week in one year.
Some analysts, however, saw bargains after the sell-off.
"The Spanish stock market is a high beta market and goes up
relatively more on good news, but falls more on bad news. As the
European economy improves, the periphery will have the biggest
leverage to the recovery," Philippe Gijsels, head of research at
BNP Paribas Fortis Global Markets, said.
"Therefore this correction may represent a buying
The Spanish stock market dragged down the pan-European
FTSEurofirst 300 index, which fell 1.4 percent to
1,314.96 points by 1158 GMT.
The index turned negative for the year after Friday's
sell-off, which resulted in the Euro STOXX 50 volatility index
, Europe's widely-used measure of investor risk aversion
surging 14 percent to a three-month high.
Friday's losses for the FTSEurofirst 300 were on the top of
a more than 1 percent drop in the previous session and placed it
on track to post its biggest weekly fall since mid-December.
European equities have retreated after scaling new highs
this month that saw the FTSEurofirst 300 setting a 5-1/2-year
peak and Germany's DAX hitting record highs, as concerns about
the fourth-quarter earnings season have risen.
Sentiment worsened after weaker-than-expected sales from
Starbucks and an earnings miss from McDonald's
overnight, underscoring the still fragile health of the global
economy. In Europe, Stora Enso said it plans to close
a paper-making machine due to weak demand.
"We are not having high expectations from this earnings
season. It is not likely to be spectacular," said Ronny Claeys,
senior strategist at KBC Asset Management.
"Investors are looking for some guidance from companies for
2014 and that's going to be very crucial for the market."
STOXX Europe 600 firms are on average seen missing consensus
quarterly earnings forecasts by 2.4 percent, according to
StarMine SmartEstimates, which focus on the up-to-date
predictions of the historically most accurate analysts.