* FTSEurofirst 300 down 0.8 pct in mid-session trade
* FTSEurofirst on track for 1st monthly loss since August
* Electrolux falls after posting lower earnings
By Sudip Kar-Gupta
LONDON, Jan 31 European shares were on course on
Friday for their first monthly loss since August, hurt by fresh
signs that the region's companies are being impacted by
turbulence in emerging markets.
European equity indexes also weakened further after data
showed a drop in euro zone consumer price inflation, which
reinforced concerns among some investors of deflation.
The pan-European FTSEurofirst 300 index was down by
0.8 percent at 1,283.48 points in mid-session trading, putting
the index on track for a fall of around 2.5 percent in January,
after having risen for the previous four months.
Shares in Electrolux slid 6.8 percent lower after
the Swedish home appliances maker posted a bigger-than-expected
drop in quarterly earnings.
Electrolux was impacted by a slump in Brazil, whose economy
has faced a fall in its national currency, and global equities
have lost ground this week over problems in Brazil and other
emerging markets, including Argentina, Ukraine and Turkey.
Emerging market economies have had a rough ride since the
U.S. Federal Reserve last year first mooted a wind-down of its
bond-buying programme, a driver of investment into emerging
The FTSEurofirst 300 index slightly extended losses after
the publication of the unexpected fall in euro zone inflation,
and the euro zone's blue-chip Euro STOXX 50 index
was down by 1.3 percent at 2,989.27 points.
"There's a plethora of bad news that the market has to
absorb," said JNF Capital investment manager Ed Smyth.
According to data from Thomson Reuters StarMine, out of the
28 companies on the pan-European STOXX 600 index to
have reported fourth quarter earnings so far, only 46 percent
have reported earnings above analyst expectations. This is
slightly lower than the long-term average of 47 percent.
EQUITIES STILL BEST ASSET CLASS?
Nevertheless, JNF Capital's Smyth said equities remained the
best asset class, compared to bonds or cash, where returns have
been hit by record low interest rates set by central banks.
Injections of liquidity by major world central banks,
coupled with signs of a slow economic recovery in Europe, had
driven a European stock market rally in 2013, with the
FTSEurofirst 300 rising 16 percent last year.
Many investors with a longer-term view over the whole of
2014 remain positive on European equities this year, saying the
stock market should gradually rise over the course of the year
as the region's economic recovery slowly strengthens.
"The medium-to-long term upwards trend is still intact.
Those who are calling for a collapse will be buried," said
But traders such as ACIES Asset Management's Andreas Clenow
said now was not the time to go back into the equity market.
"Most likely, the bull market is not over, but for now it
looks shaky. I'm taking a very defensive stance in the
short-term. We've closed out long positions and raised some
cash," he said.