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Wednesday July 14, 02:41
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European markets closed lower on technology stocks
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A fresh flurry of downside pressure on the chip manufacturing sector, much of it triggered by news that Intel of the US had cut its profit margin forecast overnight, was among the main triggers for another painful session across European stock markets on Wednesday.
Such was extent of investor disillusionment in markets that there were no upside performers in the FTSE Eurotop 300 sub-sectors throughout the morning session, although that performance altered significantly later in the day, when Wall Street picked up after a stuttering start to the US session.
Similarly none of the leading national indices could manage a positive showing until the mid-afternoon.
The benchmark European index, the FTSE Eurotop 300, languished all morning before settling a net 0.2 per cent down on balance at 980.06, having been as low as 970.68 at one stage.
The recent weakness affecting stock markets also began to cause ripples of unease across the financial areas, where the general and life insurance sectors took a buffeting and the banks fell away sharply.
But it was the IT computer software and related stocks that continued to take persistent punishment.
The Intel news, coming hard on the heels of a series of disappointing quarterly reports from numerous leading US groups last week, left their European counterparts floundering in spite of what appeared to be an impressive set of quarterly figures from ASML, the Dutch chip equipment maker.
ASML delivered what Deutsche Bank analysts said were "ahead of forecasts" and Dresdner Kleinwort Wasserstein said were "strong and ahead of our forecasts".
ASML shares fared better than their fellow components in the IT sector but nevertheless still posted a 4.3 per cent decline at €12.46.
Deutsche Bank’s Nicolas Gaudois said: "ASML delivered a compelling set of results and we view the stock as one of our top picks."
Germany’s Infineon lost 1.4 per cent to €9.67, followed by STMicroelectronic, which dropped 1.8 per cent to €16.63.
While many of the banks struggled in the face of the widespread market sell-off, the Greek banking sector managed to resist the downside pull thanks to a bullish note published by JP Morgan that initiated coverage of the sector with an "overweight" rating relative to the JP Morgan European banking universe.
"The fundamentals look attractive," JP Morgan said, adding: "Currently the Greek banks are enjoying not only the strongest loan growth in Europe but also improving margins with a more profitable retail-driven asset mix and a solid asset quality.
"National Bank is our top pick, and our second-preferred is Eurobank, followed by Alpha. Of the smaller banks we like Piraeus."
Shares in National Bank rose 0.8 per cent to €17.64, Alpha Bank was up the same percentage at €20.98, while Eurobank edged up 0.2 per cent to €17.58.
The Italian banking sector was enlivened by news that Mediobanca had placed a block of 44m shares in Banca Intesa, about 0.7 per cent of the latter’s issued capital, at €3.09 each, to institutional investors. Intesa shares settled 0.3 per cent firmer at €3.11 on the news. It was also announced that Intesa’s plan to buy a controlling stake in Turkey’s Garanti Bankasi had run into problems.
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