March 21, 2013 / 12:10 PM / in 5 years

European shares drop as German data darkens mood

* FTSEurofirst 300 down 0.5 pct, weighed by autos
    * German PMI survey deals blow to market
    * Lanxess slides, predicts drop in Q1 profit

    By Tricia Wright
    LONDON, March 21 (Reuters) - European shares fell on
Thursday as disappointing German data made investors already
nervous about Cyprus's debt crisis wary, though some analysts
expected losses to be short-lived.
    Autos, sensitive to market nervousness, fell
sharply, as did German synthetic-rubber maker Lanxess 
which joined the list of auto suppliers to take a hit from
anaemic European car markets.
    Shares in Lanxess tumbled more than 7 percent to a
seven-month low, leading the market down, after the company
warned of a sharp drop in earnings in the first quarter.
    The German data, which suggested Europe's largest economy
would eke out meagre growth this quarter, outweighed a pickup in
Chinese factory activity and a commitment by the U.S. Federal
Reserve towards its stimulus programme.
    The FTSEurofirst 300 was down 0.5 percent at
1,193.27 by 1139 GMT, having risen 0.3 percent on Wednesday. 
    The FTSEurofirst 300, with a 0.8 percent fall so far this
week, could be heading for its biggest weekly loss since
November. Traders, however, said that Friday's German March Ifo
business climate data could well light a spark under the market.
    "If we get a good Ifo tomorrow suddenly equity markets will
bounce back. It's very, very short term (the weakness)," Michael
Hewson, analyst at CMC Markets, said.
    "At the moment the markets are a little bit surprised and
there's a little bit of profit taking after the gains that we
saw yesterday."
    Cyprus's crisis preyed on investor sentiment, with the
island's government endeavouring to avert a financial meltdown
and ordering banks to stay shut until next week, after the
debt-stricken country rejected the terms of a European Union
    Strong macro data from China, showing a pickup in growth in
the country's vast manufacturing sector, and a statement from
the Fed, which said it would stick to its $85 billion monthly
bond-buying stimulus, helped keep a floor under losses.
    Some investors remained relatively unfazed about the
situation in Cyprus.
    "I think (Cyprus) is very much just a stumbling block and
nothing else. I really don't think it's going to stop the market
and I don't see a big selloff on the back of it at all," said
Terry Torrison, managing director at Monaco-based McLaren
    The euro zone's blue-chip Euro STOXX 50 index 
was 0.7 percent weaker at 2,689.78. It has seen choppy trading
throughout the course of this week when it traded within a
50-point range. Some technical analysts are bearish.
    Barclays Capital analyst Lynnden Branigan said that as long
as the index is capped below 2,712, a high hit earlier in the
week, there is risk in the short term for the index to slip.
    Crossing below the support at 2,660 (Tuesday's low) could
send the index to the next target of 2,625 (around the 100-day
moving average), and potentially to 2,590 before stabilising, he
    Nicolas Suiffet, a technical analyst at Trading Central in
Paris, concurred, viewing 2,625 as the next target should the
index breach 2,660.
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