* FTSEurofirst 300 down 0.1 pct
* Carlsberg warns of deteriorating conditions in Russia
* Heineken surges after forecast-beating results
* Luxottica falls on reports CEO to step down
* Infineon to buy U.S.-based International Rectifier
By Tricia Wright
LONDON, Aug 20 European shares dipped on
Wednesday, ending a two-day rally, with investors rattled by
Carlsberg's warning that profits would fall this year
due to deteriorating conditions in Russia.
Further souring the market mood was the spectre of a G7
central bank raising interest rates as soon as at the start of
next year after Bank of England minutes showed two of the bank's
nine rate-setting policymakers voted for a hike this month.
The U.S. Federal Reserve is set to release minutes from its
July 29-30 policy meeting at 1800 GMT which may give clues on
its outlook for interest rates.
Shares in Carlsberg fell 3.6 percent after warning on
profits. The Danish brewer derives 35 percent of its profits
from Russia, making it a test case of how European companies
will be affected by tit-for-tat sanctions between the West and
Russia over the conflict in Ukraine.
Shares in rival Heineken, however, surged 8.3
percent after it posted better-than-expected first-half
operating profit, as it sped up cost savings and increased
volumes in all regions bar Central and Eastern Europe.
Overall, investors were wary of equities, hit in the last
few weeks by fears of an escalation in the Ukrainian crisis
which has revealed new vulnerabilities in Europe's stumbling
The violence in Ukraine and sanctions against Russia, a
major energy supplier to Europe, have muddied the forecasts of a
number of multinationals including Henkel, Adidas
"I think (Ukraine-Russia) does provide a deep-seated concern
in that it is a seemingly intractable problem for both sides and
it does now have serious economic consequences ... The recovery
may in some regions actually be reaching a point where it's
going to slow down in the foreseeable future," Seven Investment
Management chief investment strategist Ros Price said.
"There is a lot of opportunity (within equities) but there
is a lot of downside risk," she said, noting her preference for
exporters to Asia and China where growth seems to be picking up.
The FTSEurofirst 300 index of top European shares
closed down 0.1 percent at 1,346.02 points, after gaining 1.8
percent in the past two sessions.
Stocks had been helped this week by strong U.S. housing data
and soft UK inflation figures.
The euro zone's blue-chip Euro STOXX 50 index
fell 0.3 percent to 3,083.50 points.
"The recent rebound from the June-August drop should help
European indexes retrace about 50 percent of the pullback, but
beyond that, the upside potential is quite limited. Indexes are
stuck in a range," Aurel BGC analyst Gerard Sagnier said.
The FTSEurofirst 300 - which had tumbled 7 percent
between late June and early August - has recovered nearly half
of that slide, testing the 50-percent Fibonacci retracement
level on Wednesday, at 1,348.11 points.
Luxottica, the world's largest eyewear maker by
revenue, shed 3.6 percent on reports that CEO Andrea Guerra may
step down over differences of opinion with founder and chairman
Leonardo Del Vecchio.
Luxottica declined to comment. Guerra, widely seen as a
driving force behind Luxottica's success in recent years, has
been CEO since 2004.
After the market close, German chipmaker Infineon
said that it had agreed to buy U.S.-based International
Rectifier for about $3 billion in cash.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Additional reporting by Blaise Robinson; Editing by Louise