* FTSEurofirst 300 down 0.2 pct, Euro STOXX 50 down 0.4 pct
* Earnings outlook darkens as Germany cuts growth forecast
* Investors seek protection as U.S. jobs data may disappoint
* Govt crisis risk hits Italy stocks
By Francesco Canepa
LONDON, Dec 7 European shares edged down on
Friday after Germany's central bank slashed its growth
forecasts, and as investors booked profits on concerns U.S. jobs
data may disappoint.
The Bundesbank cut its growth outlook for the euro zone's
largest economy on Friday, less than 24 hours after the European
Central Bank slashed its own forecasts for the bloc, darkening
the prospects for European corporate profits next year.
"We think earnings will be revised down, which is bound to
create concerns," Emmanuel Cau, a strategist at JPMorgan said.
JPMorgan expects no growth in European earnings per share
next year, compared to current consensus estimates predicting a
9.2 percent increase, according to Starmine data.
Cau warned that this would likely result in share price
volatility in the first half of the year, but he remained
confident that European shares would rebound in the second half
as easier monetary conditions help stabilise economic growth.
He expected the Euro STOXX 50 index, down 0.4 percent at
2,593.49 points at 1133 GMT on Friday, to end 2013 at 2,750
The index faced a strong term resistance corresponding to
its 2012 high of 2,611.
Philippe Delabarre, a technical analyst at Trading Central
in Paris, said a close above that level would likely send the
index rallying towards 2,700 next week.
"On the contrary, if the index fails to break above this
threshold today...a consolidation towards 2,550 will be foreseen
until next Friday," he said.
The broader FTSEurofirst 300 index traded 0.2
percent lower at 1,129.31 points.
Bottom of the index was Deutsche Telekom, down
3.2 percent after the company cut its dividend for the next two
The FTSEurofirst 300 has risen 7 percent since mid-November
to hit an 18-month high on Thursday on expectations U.S. policy
maker would avoid a "fiscal cliff" of tax rises and spending
cuts that could stall the world's largest economy.
U.S. DATA RISK
Investors booked some profits on Friday and were reluctant
to open new positions on fears U.S. employment data due at 1330
GMT may disappoint in the wake of "superstorm" Sandy, which made
economic forecasting tougher.
Nonfarm employment is forecast to have increased by 93,000
jobs last month after advancing by 171,000 in October, according
to a Reuters survey of economists. The unemployment rate is seen
holding steady at 7.9 percent.
Quantitative research from Societe Generale suggests that
the Euro STOXX 50 could rise 0.7 percent in case of a 100,000
upside surprise on payrolls, while the FTSE 100, down
0.2 percent at 5,891 points, could rise 0.5 percent.
A London-based volatility trader said his clients were
buying 'puts', or options to sell European shares, and
highlighted implied volatility on the front end of the curve was
rising, indicating concerns about an imminent fall in share
"Ahead of bad numbers, traders are running for protection or
at least closing their short-term positions", he said, adding
that he was positioning for a fall in share prices and a rise in
The Euro STOXX 50 volatility index, which gauges
option prices on euro zone blue chips and is regarded a measure
of investor expectations of future share price swings, was up
3.2 percent at 17.54.
Among investors booking profits was Ed Woolfitt, head of
trading at Galvan, who cashed in on a 4.5 percent rise in shares
of U.K. miner Rio Tinto this week.
"Rather than doing too much here I will be closing profits
and reducing exposure over the weekend," he said.
"If we close above 5,900 (on the FTSE) then there may be
room to see further gains but...is it really worth taking on
further risk with the markets here? Probably not if I want to
receive a Christmas card from my clients."
Italy's FTSE MIB shed 1.2 percent, the worst
performing major index in Europe, with banks weighed down by
concerns Mario Monti's government, put in place last year to
promote an austerity and reform agenda, could fall.
Former premier Silvio Berlusconi's party withdrew its
support for Monti on Thursday, raising the risk of a snap
election, but President Giorgio Napolitano said he would work to
avoid a crisis and there was no need for alarm.
If the government does fall, an election would likely be
called only a few weeks earlier than the expected date in early
March, but this would upset nervous investors.
William De Vijlder, chief investment officer for strategy &
partners at BNP-Paribas Investment Partners, said some share
price volatility was on the cards in the run-up to the Italian
But De Vijlder argued the European Central Bank's pledge to
buy the debt of countries that apply for financial aid provided
reassurance for investors, meaning a repeat of the sharp selloff
seen in 2011 was unlikely.