Tech stocks underperform as U.S. deadlock dents Europe shares


* Euro STOXX 50 down 0.1 pct, FTSEurofirst 300 flat

* Ericsson and Dassault Systemes fall, hitting tech sector

* U.S. stalemate pegs back European equity indexes

* Most investors still expect eventual U.S. debt deal

By Sudip Kar-Gupta

LONDON, Oct 14 (Reuters) - Falls in Ericsson andDassault Systemes hit technology stocks on Monday, asa lack of concrete progress in resolving a U.S budget deadlockheld back European shares.

The euro zone's blue-chip Euro STOXX 50 index slipped 0.1 percent to 2,971.46 points while the pan-EuropeanFTSEurofirst 300 index was flat at 1,250.63 points.

The STOXX Europe 600 Technology Index was theworst-performing European equity sector, falling 1.2 percentafter being dragged lower by a 2.7 percent drop at wirelessnetworks group Ericsson and a 9.5 percent slump at DassaultSystemes.

Ericsson was hit by a ratings downgrade by Barclays, whileDassault, a software and consulting group, fell after warningthat lower than expected orders would hit revenue growth.

European equities were also held back by continuingstalemate in Washington over a new federal budget or raising the$16.7 trillion U.S. debt ceiling, which Treasury Secretary JackLew said the government would hit no later than Oct. 17.

Even though most investors expect an eventual resolution,some have used the uncertainty to sell shares to cash in on therally so far this year, with the FTSEurofirst 300 up 10 percentsince the start of 2013 and the Euro STOXX 50 up 13 percent.

Andrea Williams, European equity fund manager at RoyalLondon Asset Management, said she had trimmed back some equityholdings over the last month.

She added that revenue and profit warnings from the likes ofDassault Systemes and Unilever were a further reason tohave sold off some equity positions.

"We've raised a bit of cash. We're a little bit concernedabout the forthcoming results season, as shown by the DassaultSystemes warning today," said Williams.

Cyrille Urfer, head of asset allocation at Swiss bank Gonet,remained optimistic that politicians would reach a deal to raise the U.S. debt ceiling, which would in turn give anotherleg-up to European shares.

"I cannot believe that they will not find a solution. At theleast, they can push the can down the road again for a couple ofmonths," he said.

"There will be volatility, but volatility meansopportunities and Europe has been an interesting place to investover the last couple of months."

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