* FTSEurofirst 300 down 0.7 percent
* PPR falls after sales miss
* WPP slips after update
* Equities underpinned by stimulus expectations
By David Brett
LONDON, April 26 Disappointing corporate
earnings pushed European shares lower in midsession trade on
Friday, halting momentum on indexes which had risen over the
previous five sessions.
Recent gains have been driven by expectations that central
banks will provide extra economic stimulus following weak data -
particularly the European Central Bank when it meets next week.
By 1026 GMT, the FTSEurofirst 300 was down 7.87
points, or 0.7 percent, at 1,192.77.
French fashion firm and luxury goods group PPR
missed first-quarter sales forecasts, hit by sluggish trading in
Europe and slower growth in China. Its stock fell 6.3 percent.
Telecom equipment maker Alcatel-Lucent shed 2.1
percent after posting a first-quarter loss, while Norwegian
telecoms company Telenor fell 2.5 percent after
lowering its revenue growth outlook after a slower quarter.
WPP shed 0.9 percent after its outlook tempered
expectations for a stock that has outperformed FTSE 100
by around 16 pct in 2013.
"There is a hint of realism from management comments that
certain pockets of economic recovery remain challenged," Richard
Hunter, head of equities at Hargreaves Lansdown Stockbrokers
Market consensus of WPP is a buy, while top analysts in the
stock expect full year earnings per share of 81.80 pence, 1.06
pct above market consensus, according to Thomson Reuters data,
suggesting the company has little room to disappoint.
Thomson Reuters StarMine data showed 51 percent of the STOXX
Europe 600 companies that have announced results so far
have missed analysts' forecasts, lagging the United States,
where only 27 percent companies have missed predictions.
"Earnings have recently been mostly lower than expected from
bellwether stocks and despite the quantitative easing measures
in place one has to wonder just how strong the company earnings
would be without the stimulus programs," Jawaid Afsar, sales
trader at SecurEquity, said.
The FTSEurofirst 300 is approaching the five-year high of
1,207 it hit in late March before selling off and remains on
track to record its best weekly rise in five months, helped by
the stimulus being pumped in to markets by central banks.
"Europe remains vulnerable. With no impetus coming from
domestic demand, it remains reliant on the fortunes of the
global economic cycle," Credit Suisse said in a note.
"The vulnerability is magnified by the fact that domestic
demand in core Europe is not offsetting the weakness in the
periphery," it said.
The European Central Bank is expected to cut interest rates
next week but that won't do much to pull the euro zone economy
out of recession, a Reuters poll of 76 economists showed on
Christian Schulz, Senior Economist, said in a note more
likely than not, when the ECB acts it will cut rates by 25 basis
points on top of some targeted initiatives to ease the credit
crunch for small- and medium-sized enterprises at the periphery.
Monetary stimulus erodes the yield value of fixed income
assets, encouraging investments in a stock market in which a
bubble could form if corporate earnings flag.
Miners, which are particularly sensitive to
changing economic conditions, led the index lower, shedding 1.8
With growth very much in focus investors will watch for the
latest reading of U.S. GDP.
U.S. economic growth probably gained steam in the first
quarter on strong consumer spending, but the momentum is already
ebbing and could slow further as the impact of automatic
government spending cuts kick in.
"Today's GDP data will be seen as crucial test to see if the
recovery is on track in the U.S.," SecurEquity's Afsar said.