Reuters logo
UPDATE 1-U.S. impasse hits European shares, Getinge slides on warning
October 8, 2013 / 4:24 PM / in 4 years

UPDATE 1-U.S. impasse hits European shares, Getinge slides on warning

* FTSEurofirst down 0.8 pct, Euro STOXX 50 falls 0.7 pct

* Getinge slumps 10.3 percent, leads healthcare selloff

* HSBC sees Europe outperformance as economy improves

By Francesco Canepa

LONDON, Oct 8 (Reuters) - European shares fell on Tuesday as a U.S. budget deadlock unnerved investors and medical technology group Getinge led a sellof in the healthcare sector after a profit warning.

The pan-European FTSEurofirst 300 index shed 0.8 percent to 1,231.27 points, down for the fourth time in five sessions as U.S. lawmakers remained deadlocked over a government shutdown and raising the country’s debt limit.

The euro zone’s blue-chip Euro STOXX 50 index, meanwhile, fell 0.7 percent to 2,903.35 points.

The U.S. Congress has only nine days left to raise the sovereign debt ceiling and avert a default.

“The most likely scenario is that it won’t happen but for sure it ‘freezes’ some investors (from buying) in the very short term,” said Marc Renaud, chairman of Paris-based Mandarine Gestion, which manages 1.8 billion euros ($2.44 billion).

Mandarine has cut the net equity exposure of its asset allocation fund to 37 percent currently, from 43 percent in August, using derivatives to sell European indexes at a future date. The fund’s maximum net exposure is 60 percent.

Among single stocks, Getinge fell 10.3 percent to the bottom of the FTSEurofirst 300 in volume 14 times the average for the past three months after the group warned on its profits, citing delays to the benefits of an acquisition, taxes and exchange rate moves.

The stock led fallers in the STOXX Europe 600 Healthcare index, which fell 1.2 percent. Drugmakers Novartis and GlaxoSmithKline also weighed after seeing their price targets cut by JP Morgan and Berenberg, respectively.

Getinge’s warning followed similar moves by consumer goods group Unilever and cruise operator Carnival in recent weeks.

Analysts are cutting their estimates for European companies despite better economic data for the region, a move often in response to weaker emerging market (EM) currencies. The pace of downgrades, however, has slowed in recent weeks, Datastream data showed.

“There are some specific issues such as EM currency weakness, but we expect the improving economic backdrop to drive upside (earnings) surprises from here,” Daniel Grosvenor, global strategist at HSBC bank, said.

“Analysts are still revising down their estimates, but at a slower pace than previously, and that ... effect is usually positive for the market.”

HSBC expects the FTSEurofirst 300 and the Euro STOXX 50 to climb about 13.5 percent to hit 1,400 points and 3,300 points by the end of 2014, respectively, outpacing the U.S. S&P 500 index.

European shares have outperformed their U.S. counterparts since July as economic momentum in Europe improved, the U.S. monetary policy became more uncertain and, more recently, amid the threat of a U.S. default.

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below