* FTSEurofirst 300 down 0.6 pct
* Italy's FTSE MIB among worst performing stock indexes
* AB Foods drops as Suedzucker warns on sugar outlook
By Tricia Wright
LONDON, April 8 European shares fell for a
second day on Tuesday as investors sold out of some of the
year's top performing regional indexes and stocks on fears the
upcoming earnings season will prove sobering.
Markets in the euro zone periphery led losses, with Italy's
FTSE MIB index down 1.8 percent in brisk trading
volumes. The Milan benchmark has strongly outperformed broad
European indexes since the start of the year.
Among individual stocks, Associated British Foods
fell 4 percent, with traders citing a read-across to the food
and textile retailer's sugar business from a profit warning by
German mid-cap sugar producer Suedzucker. Its shares
sank nearly 20 percent.
The downbeat news, which followed a similar warning in
February by British rival Tate & Lyle, fuelled concerns
ABF might have to also cut guidance, traders said, despite
strength in its clothes retailing arm Primark.
"(ABF) could take a whack from (its) sugar division, which
is about a quarter of its business," said Manoj Ladwa, head of
trading at TJM Partners.
"It's had a fantastic run, primarily on the back of Primark,
but valuations seem pretty high, and it could potentially warn
on profits on the back of this news (from Suedzucker)."
According to Thomson Reuters Starmine, ABF trades at a
SmartEstimate Price/EPS (forward 12 months) ratio of 25.9,
compared to Tate with 12.7 and Suedzucker with 14.4.
ABF's retreat was among the biggest on the pan-European
FTSEurofirst 300, down 0.6 percent at 1,328.21 points
by 1445 GMT.
The index reported its worst daily percentage drop in a
month on Monday as investors took profit on a nine-day rally,
fearing the market had got ahead of itself and the upcoming
first-quarter results would expose fundamental weaknesses.
A stock market surge in 2013 and in part of this year has
left the MSCI Europe dollar-denominated index trading at 13.9
times its expected earnings for the next 12 months, the highest
valuation multiple since 2005, Datastream data showed.
Earnings momentum for European shares has remained negative
throughout the period, with analysts cutting their 12-month
forward estimate for European stocks by 2.5 percent over the
past three months, the data showed.
"The positive catalyst would be if earnings progress faster
than people are expecting. That doesn't look terribly likely for
now," said Frances Hudson, global thematic strategist at
Standard Life Investments.
Euro zone banks, which have risen around 20 percent
since early December on growing bets on a recovery in the euro
zone, were also under pressure.
Among sellers was Markus Huber, senior trader at Peregrine &
Black, who expected negative surprises from the sector during
the earnings season as a result of several investigations into
market rigging and mounting regulatory pressure to increase
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 Francesco Canepa, Alistair Smout and