* FTSEurofirst 300 index falls 0.4 percent, Euro STOXX 50
down 0.5 pct
* Bouygues and L'Oreal among worst performers after weak
* Unease over weak global economy, Jackson Hole persists
By Sudip Kar-Gupta
LONDON, Aug 29 European shares fell on
Wednesday, led lower by French luxury goods companies Bouygues
and L'Oreal which both published
disappointing earnings figures.
Worries over the weak economic outlook and nervousness ahead
of a key gathering of central bankers on Friday are also
weighing on equity markets.
The FTSEurofirst 300 index fell 0.4 percent to
1,084.12 points, while the Euro STOXX 50 index
declined by 0.5 percent to 2,430.45 points.
Trading has been choppy in low volume over the past week, as
investors weigh up whether the European Central Bank (ECB) will
launch sovereign bond purchases or cut interest rates in
September, and whether the U.S. Federal Reserve will hint at new
quantitative easing measures at Friday's Jackson Hole gathering.
Worries over the timing and extent of any ECB or Fed action
have capped gains in equity markets and led some investors to
sell shares bought on the cheap in June and July, in case of a
stock market fall in September.
"There is plenty of room for disappointment. We still think
that the upside remains limited," said Central Markets senior
trader Joe Neighbour.
Neighbour recommended selling positions on Germany's DAX
index, which was down 0.6 percent at 6,964.24 points,
at around the 7,000 point level.
He also backed taking out a "stop loss" order on the DAX at
around that mark. A "stop loss" is an order to close out a
position at a particular level when the price moves against you.
BOUYGUES AND L'OREAL SLUMP
French conglomerate Bouygues and luxury goods group L'Oreal
were among the worst-performing stocks on the FTSEurofirst 300
index, and contributed to a 0.6 percent fall on France's
benchmark CAC-40 index.
Bouygues slumped by around 8 percent after posting lower
first-half profits on Tuesday after the stock market had closed,
with Citigroup keeping a "sell" rating on the stock.
L'Oreal fell 4.2 percent after also reporting earnings
slightly below market expectations on Tuesday, which prompted
UBS to downgrade the stock to "neutral" from "buy".
Luxury goods companies have been exposed to the weak global
economy, highlighted by a slowdown in China and the euro zone's
ongoing sovereign debt crisis, which threatens to overwhelm
Spain and Italy.
Italian bank Banca Monte dei Paschi di Siena (BMPS)
posted a big first-half loss overnight, sending its
shares 6 percent lower and leaving the Italian government primed
for a big stake in the lender.
Fears have also grown that Spain, which has already agreed
to a bailout for its debt-ridden banks, may need a full
"Capital and funding pressures in Spain continue to escalate
- underscoring the need for ECB and Spanish action," Morgan
Stanley analysts wrote in a research note.
They remained "underweight" on southern European bank
stocks, preferring instead the likes of Switzerland's UBS
, Britain's HSBC, France's BNP Paribas
"We've got the prospects of further quantitative easing in
the United States and a rate cut in Europe, but against that
we've got a worsening economic outlook, so we're in limbo for
the time being," said Berkeley Futures Ltd associate director