* FTSEurofirst 300 down 0.7 pct, Euro STOXX 50 off 0.8 pct
* Celesio slides after takeover fails
* Volkswagen shares hit by UBS downgrade
By Tricia Wright
LONDON, Jan 14 European shares fell on Tuesday,
taking their cue from Wall Street, which suffered a steep
sell-off following a string of disappointing earnings and
Shares in German drugs distributor Celesio shed
6.5 percent after suitor McKesson failed to garner
enough shares to carry through its takeover bid.
Trade in Celesio shares rocketed, with the issue logging 130
percent of its 90-day average volume in the first 40 minutes
Volkswagen was another big faller, down 2.7
percent, knocked by a UBS downgrade to "sell" from "neutral".
"We ... expect some earnings improvement but we are more
concerned about the amount of capital poured into the operating
business partly to meet CO2 requirements and finco capital
rules, both of which are negative for returns," the investment
bank wrote in a note.
At 0842 GMT, the FTSEurofirst 300 index of top
European shares was down 0.7 percent at 1,315.71 points, while
the euro zone's blue-chip Euro STOXX 50 index was
off 0.8 percent at 3,087.98, both retreating from recent
A number of mid-sized companies including SodaStream
, Lululemon Athletica, Express Inc and
Aaron's posted weak earnings or forecasts on Monday,
contributing to a 1.1 percent drop on the Dow Jones industrial
average, while the S&P 500 lost 1.3 percent and
the Nasdaq Composite fell 1.5 percent.
This served as negative news for investors poring over
earnings for clues as to the likely strength of the European
fourth-quarter corporate reporting season, which will gather
pace in the last week of the month.
The Euro STOXX 50 Volatility index - known as
Europe's 'fear gauge' - rose 2.7 percent, signalling a drop in
demand for risk.
"It is a concern that even though the balance of the macro
data has continued to show a steady improvement across most of
the developed economies that it's not shown up in earnings
numbers," Peel Hunt equity strategist Ian Williams said.
"Until we get the earnings support, it's difficult to see
why we would get much more of a valuation upside."
The STOXX Europe 600 is trading at 13.7 times
expected earnings over the next 12 months, above a 10-year
average P/E of 12 times, Thomson Reuters Datastream data showed.
Gain Capital technical analyst Fawad Razaqzada saw scope for
more near-term weakness on the Euro STOXX 50, which could "pull
back towards support at 3,050, and possibly lower".