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Europe stocks halt winning run; food, oils retreat

Published 07/23/2009, 07:27 AM
Updated 07/23/2009, 07:32 AM

* FTSEurofirst 300 down 0.1 percent, halts 8-day winning run

* Credit Suisse's strong earnings boost banking stocks

* Defensives drop; energy shares dip along with oil

* For up-to-the-minute market news, click on

By Blaise Robinson

PARIS, July 23 (Reuters) - European stocks were down 0.1 percent around midday on Thursday, halting an eight-session winning run, as falling food and utilities shares offset a rally in banks sparked by Credit Suisse's upbeat results.

Energy shares were also on the downside, losing ground along with crude oil prices. Total was down 1 percent, while Royal Dutch Shell fell 0.8 percent.

At 1100 GMT, the FTSEurofirst 300 index of top European shares was down 0.1 percent at 889.32 points. The index has surged 9.2 percent since July 10, and is now up 7 percent on the year.

Credit Suisse climbed 5.1 percent after the lender's second-quarter profit beat forecasts, helped by market share gains in investment banking and hefty wealth management inflows, eclipsing a large fair value charge on its own debt.

The upbeat results triggered gains in the banking sector, with Banco Santander up 1 percent and HSBC up 1.9 percent.

ABB was also on the rise, gaining 2.9 percent after the Swiss engineering group said cost-cutting limited a fall in profit in the second quarter.

"The flow of better-than-expected earnings has boosted sentiment, although trading volumes remain relatively light," said Christian Jimenez, president of Imene Investment partners, in Paris.

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"Even if we get a few corrections, we're back into an upside trend, and it looks like the market will stay in this trend for a while. But this is a trader's market more than a long-term investor's market," he said.

Pharma group Roche added 2.3 percent after the company gave a bullish forecast for the next two years on the back of its $47 billion acquisition of Genentech and said it would expand capacity for H1N1 flu drug Tamiflu.

Shares of Publicis, the world's third-largest advertising group by revenue, rose 3.3 percent after it said it sees a return to sales growth next year and kept its 2009 outlook intact after the global economic downturn hit first-half earnings.

Mining firms gained ground, rising along with metal prices. Xstrata added 1.7 percent, Rio Tinto climbed 1.9 percent and BHP Billiton rose 1.5 percent.

However, food and utilities shares, seen as defensive plays, lost ground, with Nestle down 1.4 percent, Unilever down 1.4 percent and E.ON down 0.8 percent.

Dutch telecoms group KPN lost 3.3 percent after it lowered its revenue outlook as it sees no signs of a recovery at its recession-hit business units.

END OF EARNINGS RECESSION?

Around Europe, UK's FTSE 100 index was down 0.3 percent, Germany's DAX index was down 0.2 percent, and France's CAC 40 was 0.6 percent lower.

Since reaching a record low in early March, the FTSEurofirst 300 has soared 38 percent, powered by gains in miners and financial institutions -- with the DJ STOXX banking index up 121 percent and the basic resources index up 78 percent --, as fears over the health of the global economy and the outlook for corporate profits receded.

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"Analysts are putting through more global earnings upgrades than downgrades for the first time since August 2007," said Robert Buckland, strategist at Citigroup Global Markets.

"Financial conditions and economic expectations are also improving. It all suggests we could be approaching the end of the global earnings recession," he wrote in a note.

(Reporting by Blaise Robinson; editing by Simon Jessop)

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