* FTSEurofirst 300 down 0.5 pct; Portugal's PSI down 3.3 pct
* Cement makers lead declines as forex hits results
* U.S. GDP's strength provides no help; focus shifts to Fed
* Traders fear escalation in Russia-Ukraine conflict
By Francesco Canepa
LONDON, July 30 European shares closed lower on
Wednesday, as strong U.S. growth failed to offset some weak
earnings reports and concern the conflict between Russia and
Ukraine will escalate.
Holcim's and HeidelbergCement's shares
fell 4.8 percent and 2.8 percent respectively, leaving the STOXX
Europe 600 constructions and materials index down 1.5
French electrical-gear maker Schneider Electric,
down 4.3 percent, also blamed the depreciation of several
currencies against the euro for disappointing sales growth in
the first half of the year.
Companies in the STOXX Europe 600 that have reported
quarterly results so far have seen their sales drop by an
average 1 percent, StarMine data showed.
While stronger currencies in developed Europe played a role
in the decline, some strategists were starting to worry about
weaker demand in Europe, which is struggling with low growth and
"It's not so much about the currency, there's no demand from
end-customers in Europe," said Claudia Panseri, global equity
strategist at Societe Generale. "With prices also falling, I see
Bucking the trend was French car maker Peugeot,
which surged 6 percent after it posted the first positive
contribution from its core auto division in three years in the
first six months of 2014.
Dutch telecoms group KPN rose 4.7 percent after
reporting a better-than-expected second-quarter core profit,
although it was helped in part by cost cuts.
The pan-European FTSEurofirst 300 index closed 0.5
percent lower at 1,366.52 points after a choppy session.
The index extended losses in the afternoon as NATO said the
number of Russian troops and weaponry along the border with
Ukraine was increasing to "well over 12,000".
Fighting between Moscow-backed rebels and government troops
has intensified since a Malaysian airliner was shot down earlier
"(The threat of) war is the main drag on markets this
afternoon," Mike Reuter, a broker at Tradition, said.
French oil major Total fell 4.9 percent after
saying that it had stopped buying shares in Russia's Novatek
the day of the downing of a Malaysia Airlines flight
Portugal's PSI 20 fell 3.3 percent, underperforming
all major European indexes, as retailer Jeronimo Martins
and Banco Espirito Santo each fell more than
Jeronimo Martins is struggling with deflation in its two
main markets, Poland and Portugal, and BES fell amid concern it
will report a loss later on Wednesday and will require a capital
U.S. GDP FAILS TO COMFORT INVESTORS
European investors failed to benefit from data showing U.S.
economic growth accelerated more than expected in the second
quarter, partly due to inventories.
The GDP report was released hours before Federal Reserve
officials conclude a two-day policy meeting. It could fuel
debate on whether the central bank needs to raise interest rates
sooner than expected, a move that would affect borrowing costs
"The Federal Reserve was expecting a rebound, and I don't
think they are going to be too heavily swayed by these changes,"
John Clarke, chief investment officer at GHC Capital Markets,
said. "My concern about European equities is that investors are
discounting too much in terms of European economic recovery."
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Additonal Reporting By Blaise Robinson; Editing by Larry King)