* FTSEurofirst 300 down 0.4 percent
* Ericsson falls after earnings miss
* Primark gives Associated British Foods a lift
* French, German PMIs point to diverging economies
(Updates prices, adds quote, detail)
By Alistair Smout
LONDON, April 23 European shares fell on
Wednesday, retracing some of the previous session's strong gains
as investors responded to weak earnings from Ericsson and mixed
data out of the euro zone.
Shares in the Swedish mobile telecom equipment maker
fell 4.9 percent, trimming the most points off of the
FTSEurofirst 300, after missing first-quarter sales and
profit forecasts on weak trading in North America.
"Numbers look a little light given the sales miss, but with
margins improving and costs seemingly under control, I'm
surprised the stock is down the thick end of 6 percent," Matt
Basi, senior sales trader at CMC Markets said, noting that
guidance for second quarter sales was bullish.
In all, earnings news was mixed, continuing a theme of the
season so far where 53 percent of STOXX Europe 600
companies that have reported results have beaten or met
The top riser was Associated British Foods, which
surged 9.1 percent after it met forecasts, gave a bullish
outlook for full-year profits and got a boost from its Primark
Following a rally since mid-2012, investors are looking for
profits to rebound to support elevated prices, with valuations
at their highest since 2005 on the STOXX 600.
"Earnings has to be the major driver. Generally the market
is quite wary of this reliance on earnings growth this year, and
it could be quite volatile until the second half of the year,"
said Veronika Pechlaner, who helps manage $13 billion of assets
at Ashburton Investments.
The pan-European FTSEurofirst 300 was down 0.4 percent at
1,341.57 at 1015 GMT, after surging 1.3 percent on Tuesday.
French blue-chip shares underperformed their German
counterparts on Wednesday after survey data showed the recovery
in France is still weaker than the euro zone's biggest economy.
France's CAC 40 index fell 0.5 percent after
Purchasing Managers Index (PMI) data for the country showed
waning momentum in its fragile economic recovery.
France's manufacturing and services figures came in slightly
below expectations, albeit still in expansion territory.
By contrast, survey data from Germany came in ahead of
expectations, posting its 12th straight month of expansion.
Germany's DAX outperformed slightly, easing just
"The gap between France and Germany is clearly widening," IG
analyst David Madden said.
"France has seen some relatively strong figures in the last
couple of months, which have started to turn opinion slightly.
But today's soft figures, coming in below expectations ... just
shows you how fragile the French economy really is."
Euro zone composite PMI data came in slightly ahead of
expectations, starting the second quarter on its strongest
footing for nearly three years.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Editing by Janet Lawrence)