* FTSEurofirst 300 down 0.6 pct, Euro STOXX 50 down 0.7 pct
* Results from ARM, Ericsson cast shadow on tech earnings
* Primark gives Associated British Foods a lift
(Updates prices at settle)
By Francesco Canepa
LONDON, April 23 European shares snapped a
three-day winning streak on Wednesday, with tech stocks hit by
disappointing results from Ericsson and chip designer ARM
Holdings, raising doubts about the sector's earnings.
Shares in telecoms equipment maker Ericsson
slumped 6.1 percent, wiping the most points off the FTSEurofirst
300. The company missed its first-quarter sales and
profit forecasts, blaming weak revenues from North America.
ARM Holdings, whose chip technology powers Apple's
iPhone, fell 2.7 percent after lacklustre royalty
revenue growth in the first quarter.
Both companies expect improvement later in the year, but the
weak results contributed to a disappointing first-quarter
earnings season for the tech sector so far.
All tech companies in the STOXX Europe 600 index
that have reported through April 22 missed revenue estimates,
StarMine data showed.
The STOXX Europe 600 tech index was down 1.4 percent
"The market has quickly adjusted and understood that for
European companies the Q1 reporting season will not be a
particularly strong one," said Bernd Laux, an analyst at Kepler
Cheuvreux. "I have relatively strong confidence in this forecast
of improvement, but admittedly the risk is increasing due to the
dependence on the Christmas business."
Overall, earnings news was mixed, a theme of the season so
far. Some 53 percent of STOXX Europe 600 companies that
have reported results have beaten or met expectations.
Valuations on the STOXX 600 are at their highest since 2005
following a rally since mid-2012, and investors are looking for
profits to rebound to support elevated prices.
The top riser on Wednesday was Associated British Foods
, which surged 8.8 percent after it met forecasts, gave a
bullish outlook for full-year profits and got a boost from its
Primark clothing business.
"Earnings has to be the major driver," said Veronika
Pechlaner, who helps manage $13 billion of assets at Ashburton
Investments. "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," .
The pan-European FTSEurofirst 300 settled 0.6 percent lower
at 1,338.84 points, after surging 1.3 percent on Tuesday. The
Euro STOXX 50 fell 0.7 percent at 3,175.97 points.
The indexes extended losses in the afternoon after data
showed new U.S. home sales tumbled more than expected in March,
to an eight-month low, and the U.S. manufacturing sector
expanded at a slightly slower-than-expected pace in April.
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 Alistair Smout; Editing by Larry King)