Schneider hit by downgrade as European shares edge lower

Reuters

* FTSEurofirst 300 dips 0.2 pct, Euro STOXX 50 falls 0.4 pct

* Schneider hit by Exane BNP Paribas downgrade

* U.S debt issues weigh on market in near-term

* Most investors see October equity dip as short-lived

By Sudip Kar-Gupta

LONDON, Oct 3 (Reuters) - European shares edged lower onThursday, with Schneider Electric hit by a brokerdowngrade, as uncertainty over the resolution of the UnitedStates' debt issues dented equities.

The euro zone's blue-chip Euro STOXX 50 index fell 0.4 percent to 2,905.81 points, while the broaderpan-European FTSEurofirst 300 index dipped 0.2 percentto 1,244.56 points.

A 3.4 percent fall at Schneider took the most points off theFTSEurofirst 300 index, as Exane BNP Paribas's downgrade on thestock to "neutral" from "outperform" hit Schneider's shares.

The FTSEurofirst 300 hit a fresh 5-year high of 1,274.59points in late September while the Euro STOXX 50 hit a 2-yearhigh of 2,955.47 points.

Both markets have risen around 10 percent since the start of2013 but have slipped back in October after the U.S. governmenthad to partially shutdown this week due to disagreement amongpoliticians over the country's budget, which in turn has led touncertainty over the U.S. debt ceiling.

U.S. Treasury Secretary Jack Lew has said the United Stateswill exhaust its $16.7 trillion borrowing authority no laterthan Oct. 17.

Darren Courtney-Cook, head of trading at Central MarketsInvestment Management, expected ongoing uncertainty over theU.S. debt situation to weigh on markets this month.

He sold a position on Germany's DAX, which was down0.2 percent at 8,616.72 points, at 8,634 points on Thursday.

"I've been trading the range, buying the dip and selling thetop, but I'm looking to leave myself positioned 'short'," hesaid.

Others were more positive on a longer timeframe, arguingthat in the past the United States had always managed to reachlast-minute solutions to raise its debt ceiling and that signsof a global economic recovery would continue to lift equities.

Economic data on Thursday showed that a return to growthlast month for French and Italian companies, along with growthin Britain and Germany.

Threadneedle Investments chief investment officer MarkBurgess said his firm had raised its position on Europeanequities to "neutral" from "underweight".

Goldman Sachs economics analyst Noah Weisberger also feltany equity market dip caused by the U.S debt situation would berelatively short-lived.

"The current data, our forward views and a simple look backat past government shutdowns all suggest that current concernswill likely be short-lived," he said.

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