European shares down on Fed's less dovish approach


* FTSEurofirst 300 index falls 0.2 percent

* Fed's statement less dovish than expected

* Technip, Royal Dutch Shell drop after results

By Atul Prakash

LONDON, Oct 31 (Reuters) - European shares slipped furtheraway from five-year highs on Thursday, with the FederalReserve's less-dovish-than-expected statement raising concernsthe U.S. central bank could start trimming its stimulus soonerthan foreseen.

The Fed kept its massive stimulus plan intact as the marketwidely expected, but did not sound as alarmed about the state ofthe economy as anticipated, removing a reference to tighterfinancial conditions from its announcement.

Investors were expecting that after a recent U.S. governmentshutdown and some poor economic numbers, the Fed would not startcutting its bond buying operations until the end of the firstquarter of the next year.

"Markets in Europe are modestly lower after Wall Street hada change of heart following the Fed comments," said PhilippeGijsels, head of research at BNP Paribas Fortis Global Markets,referring to a retreat in U.S. stocks in the previous session.

"However, ample liquidity for the time being and arecovering world economy should keep equity markets wellsupported going into the new year."

At 0843 GMT, the pan-European FTSEurofirst 300 index was down 0.2 percent at 1,285.53 points after climbingto a five-year high in the previous session. However, the indexremained on track to record a second straight month of gains.

The market had advanced in the past weeks on expectations ofcontinued U.S. monetary stimulus, relief at a political deal toavert a U.S. sovereign default and some strong corporateearnings. Analysts said the focus will return to companyresults, which could set the market's near-term direction.

Oil services firm Technip fell 7 percent, the topdecliner on the FTSEeurofirst, after cutting its full-year salesand margin targets for its sub-sea business, while Royal DutchShell dropped 4.7 percent after its third quarterprofits undershot forecasts.

A fall in major oil companies put pressure on the energysector, with the STOXX Europe 600 oil and gas index falling 0.8 percent, the worst sectoral performer in Europe.

On the positive side, Geberit rose 4.3 percentafter the maker of sanitary equipment said sales grew 4.7percent in the first nine months of the year and net profit rose11.5 percent.

According to Thomson Reuters StarMine data, 53 percent ofSTOXX Europe 600 companies have met or beaten analysts'expectations so far this quarter, roughly in line with theaverage over the last few quarters.


View Comments (0)