* FTSEurofirst 300 down 0.03 pct, Euro STOXX 50 up 0.02 pct
* Italian shares outperform as bond yields hit record low
* Morrison's warning sets off sell-off among UK retailers
* Worries over Chinese growth, Ukraine weigh on sentiment
By Blaise Robinson
PARIS, March 13 European stocks were steady on
Thursday, halting their two-week slide, although a sell-off
among UK retailers after a profit warning by Morrison's kept
investors on edge.
Worries over China's pace of economic growth as well as
tensions in Ukraine also weighed on sentiment. However, Italian
stocks bucked the trend, rallying as the country's bond yields
fell to record lows at an auction, highlighting the strong
appetite for Italy's financial assets.
Milan's FTSE MIB stock index was up 0.7 percent, as
Italy sold 7.75 billion euros in bonds and paid record low
yields on three- and 15-year debt, a day after the government of
new Prime Minister Matteo Renzi approved sweeping tax cuts in a
bid to boost the stagnant economy.
Shares in utility Enel were up 3.2 percent and
Telecom Italia added 0.9 percent.
The MIB has been strongly outperforming since the start of
the year, up 10.3 percent while Europe's broad FTSEurofirst 300
is down 0.7 percent and Germany's DAX is down 3.6
percent over the same period.
"The Italian market is very impressive. That's one of the
markets that suffered the most during the debt crisis, and now
people see a strong catch-up potential," FXCM analyst Vincent
"It's one of the countries that benefits the most from the
big rotation in global asset allocation out of emerging markets
and into Europe. This momentum in flows is very strong."
Despite the recent pull-back, European stocks continue to
attract massive investment flows from global investors,
supported by expectations of a pick up in the region's economy.
At 1150 GMT, the FTSEurofirst 300 index of top
European shares was down 0.03 percent at 1,306.75 points. The
index has slipped about 3.4 percent since late February.
"It's a perfect market for swing traders," TradingSat
analyst Alexandre Tixier said.
"We've entered a very volatile consolidation phase, and the
best strategy is to go contrarian and buy when there's a big
negative move, and sell when stocks quickly bounce back. The
market could stay in this phase for a couple of months."
UK retailers dropped after Wm Morrison's sharp cut
to its profit outlook, which sent its shares down 8.6 percent.
Rivals Sainsbury's and Tesco lost 7.1 percent
and 4.6 percent respectively.
Shares in Adecco, the world's largest staffing
agency, were among the top losers, down 7.1 percent after Swiss
investment firm Jacobs Holding and the Jacobs family sold a 16
percent stake for 2.2 billion swiss francs ($2.5 billion).
German potash miner K+S sank 6.2 percent after
saying it expects operating earnings to fall for a third
straight year due to lower prices of the fertiliser ingredient
following the break-up of an export alliance between two larger
Also rattling investors, data showed China's economy slowed
markedly in the first two months of the year, with growth in
investment, retail sales and factory output all dropping to
The figures, which fuelled worries of a
greater-than-expected cooling of the world's second-biggest
economy, weighed on copper prices, which were hovering not far
off multi-year lows on Thursday.
Tensions in Ukraine also kept investors on edge. U.S.
President Barack Obama warned Russia, whose forces have taken
control of Ukraine's Crimea region, it faced costs from the West
unless it changed course in Ukraine, and pledged to "stand with
Ukraine" as he met the country's new prime minister in
"In the short run, equity markets are risk-averse due to the
political uncertainties and the fear of a slowdown in China,"
said Christian Stocker, equity strategist at UniCredit. "But in
the medium-term, the picture remains positive for equities."
Europe bourses in 2014:
Asset performance in 2014:
Today's European research round-up