Reply #16: European stocks drift lower amid mixed earnings [View All]

[Ghost Dog]

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=eurMktRpt&storyID=2007-02-15T112932Z_01_L15210970_RTRIDST_0_MARKETS-EUROPE-STOCKS-UPDATE-2.XML&pageNumber=0&imageid=&cap=&sz=13&WTModLoc=InvArt-C1-ArticlePage2

LONDON, Feb 15 (Reuters) - European stocks drifted lower by midday on Thursday as investors ploughed through a pile of mixed earnings reports that raised doubts about whether corporate profits would continue to grow apace this year. At 1105 GMT, the FTSEurofirst 300 index <.FTEU3> of top European shares was down 0.2 percent at 1,544.65 points, down from a six-year high of 1,550.19 touched earlier in the session.

Norwegian telecoms group Telenor (TEL.OL: Quote, Profile , Research) led losers with a 7-percent decline after results disappointed, though it forecast strong growth this year. Belgian drug and chemical maker Solvay (SOLBt.BR: Quote, Profile , Research) fell more than 4 percent, hurt by a decline in pharmaceutical earnings. Dutch peer Akzo Nobel (AKZO.AS: Quote, Profile , Research) lost 2.4 percent as it missed forecasts, and Swiss engineering group ABB (ABBN.VX: Quote, Profile , Research) slipped 3.4 percent.

Analysts said the rapid growth in profits of the past few years was proving difficult to replicate. "We've seen rapid earnings growth that can't be sustained indefinitely," said Brewin Dolphin chief strategist Mike Lenhoff. "Now we're seeing the transition from that kind of growth to more sustainable levels, and people are having to lower their sights." But Lenhoff added that markets would be forgiving as long as the Fed kept rates on hold. "European shares are plugged into what the U.S. Federal Reserve does, and Chairman Bernanke's comments yesterday were quite upbeat on growth and inflation," he said.

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Among major national indexes, Britain's FTSE 100 .FTSE was down 0.17 percent, France's CAC 40 <.FCHI> was down 0.04 percent, and Germany's DAX <.GDAXI> was flat.

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Strong results, and the appointment of a new chief executive, boosted shares in Credit Suisse (CSGN.VX: Quote, Profile , Research) by more than 3 percent. But there were losers elsewhere in the banking and financial sector. French bank BNP Paribas (BNPP.PA: Quote, Profile , Research) slid 3.3 percent after its results highlighted concerns over the performance of its retail banking arm. Rival Societe Generale (SOGN.PA: Quote, Profile , Research) also disappointed. Dutch financial services group ING (ING.AS: Quote, Profile , Research) dipped 0.8 percent as a weak performance in its banking division took the shine off strong insurance.

A clutch of upgrades lifted DaimlerChrysler (DCXGn.DE: Quote, Profile , Research), the world's fifth-largest carmaker, by 5.3 percent, as investors continued to warm to Wednesday's news that it was weighing options for its loss-making Chrysler unit that could lead to a sale or spin-off. "We believe the key short-term share price driver is the sustained possibility that CEO Dieter Zetsche will sanction a divorce from Chrysler," Goldman Sachs said in a note.

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