* FTSEurofirst 300 down 0.3 pct, Euro STOXX 50 off 0.5 pct
* Wall Street suffers steep sell-off Monday on poor earnings
* Celesio slides after takeover fails
By Tricia Wright
LONDON, Jan 14 European shares fell on Tuesday
as investors turned cautious after a string of disappointing
earnings and outlook statements on Wall Street.
Market concerns have been mounting as a strong rally has
left stocks looking expensive. With U.S. and European equities
trading above their long-run averages, the worry is that further
market gains will be limited until earnings start to improve.
The STOXX Europe 600 rose more than 17 percent last
year, while the S&P 500 surged about 30 percent.
Goldman Sachs said recently it reckons the S&P "has a 67
percent probability of a 10 percent drawdown during 2014". It
downgraded the U.S. equity market to "underweight" over three
months, but remained "overweight" Europe.
U.S. stocks fell sharply on Monday after a number of
mid-sized companies including SodaStream, Lululemon
Athletica, Express Inc and Aaron's
posted weak earnings or forecasts.
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.
"It is too early to get too worried but the warning signals
are increasing," said Lex van Dam, hedge fund manager at
At 1218 GMT, the FTSEurofirst 300 index of top
European shares was down 0.3 percent at 1,319.95 points, while
the euro zone's blue-chip Euro STOXX 50 index was
off 0.5 percent at 3,095.79, both retreating from recent
Ashish Misra, head of investment policy at Lloyds Bank
Private Banking, however, noted that guidance in the most recent
European earnings season for the full year and for 2014 hardly
pointed to "storm clouds on the horizon".
"I'd say no fireworks but no explosions either," he said.
"Keep some powder dry and put it to work as markets go a little
bit lower because I think that is going to prove to be a very
good buying opportunity."
Misra said that while the STOXX Europe 600, which
trades on 13.7 times expected earnings over the next 12 months,
according to Thomson Reuters Datastream, is not that far above
its 10-year average P/E at 12 times, "it is not cheap".
He reckoned that a 5 percent drop on the index, which he
said would bring the P/E down to around 13 times, would be a
good point at which to get back into the market.
German drugs distributor Celesio was a big
faller, shedding 5.3 percent, after suitor McKesson
failed to garner enough shares to carry through its takeover
Trade in Celesio shares rocketed, with the issue logging
four times its 90-day average volume around mid-session.