LONDON, Dec 19 (Reuters): European stocks edged lower on Friday,
reversing an early rise, as Italian banks came under pressure from a
downgrade by S&P and Swiss drugmaker Roche saw two major drugs fail
tests.
The FTSEurofirst 300 index of top European shares was down 0.1 per cent tot 1,355.47 points at 1113 GMT, retreating after a 3 per cent advance on Thursday.
The index was still set for a 2.6 per cent rise this week, its biggest weekly gain in a month, as the US Federal Reserve's commitment to be "patient" about raising interest rates bolstered stocks.
"The Fed's statement earlier in the week helped to squeeze us higher. But the market doesn't have a high degree of conviction at the moment," Jeremy Batstone-Carr, market analyst at Charles Stanley.
"The outlook remains one of sub-trend growth and low inflation. The downgrades in Italy illustrate that we're not out of the woods as far as growth is concerned."
Peripheral euro zone indexes were under pressure after the S&P cut Italian bank ratings, saying growth would be slower than expected. Italy's FTSE MIB was down 1.2 per cent and Monte Paschi, Intesa Sanpaolo and UniCredit were down 2.5 to 4.7 per cent.
Spain's IBEX also fell more than 1 per cent.
Roche took the most points off the FTSEurofirst 300, falling 5.3 per cent after tests of new Alzheimer's and breast cancer drugs both failed. Analysts said forecasts for 2015 would have to be revised downwards.
Air France-KLM tumbled 8.3 per cent after the airline issued its third profit warning in six months. It cut a 2014 earnings goal by 200 million euros as higher-than-expected costs from a recent pilot strike added to weaker unit revenues.
Oil and gas companies also lost ground again as oil prices dipped. Seadrill fell 9.6 per cent and Technip 2.5 per cent.
Cheaper oil has put the Russian economy under pressure, which has spread to European equity markets. Germany's BASF was down 2.4 per cent, the biggest decline on the DAX, after it abandoned an asset swap with Russia's Gazprom.
"(The) earnings impact from termination of asset swap is likely to be mild, but investors may be disappointed that BASF retains a low-growth business it wanted to exit," Paul Walsh, analyst at Morgan Stanley, said in a research note.
The FTSEurofirst 300 index of top European shares was down 0.1 per cent tot 1,355.47 points at 1113 GMT, retreating after a 3 per cent advance on Thursday.
The index was still set for a 2.6 per cent rise this week, its biggest weekly gain in a month, as the US Federal Reserve's commitment to be "patient" about raising interest rates bolstered stocks.
"The Fed's statement earlier in the week helped to squeeze us higher. But the market doesn't have a high degree of conviction at the moment," Jeremy Batstone-Carr, market analyst at Charles Stanley.
"The outlook remains one of sub-trend growth and low inflation. The downgrades in Italy illustrate that we're not out of the woods as far as growth is concerned."
Peripheral euro zone indexes were under pressure after the S&P cut Italian bank ratings, saying growth would be slower than expected. Italy's FTSE MIB was down 1.2 per cent and Monte Paschi, Intesa Sanpaolo and UniCredit were down 2.5 to 4.7 per cent.
Spain's IBEX also fell more than 1 per cent.
Roche took the most points off the FTSEurofirst 300, falling 5.3 per cent after tests of new Alzheimer's and breast cancer drugs both failed. Analysts said forecasts for 2015 would have to be revised downwards.
Air France-KLM tumbled 8.3 per cent after the airline issued its third profit warning in six months. It cut a 2014 earnings goal by 200 million euros as higher-than-expected costs from a recent pilot strike added to weaker unit revenues.
Oil and gas companies also lost ground again as oil prices dipped. Seadrill fell 9.6 per cent and Technip 2.5 per cent.
Cheaper oil has put the Russian economy under pressure, which has spread to European equity markets. Germany's BASF was down 2.4 per cent, the biggest decline on the DAX, after it abandoned an asset swap with Russia's Gazprom.
"(The) earnings impact from termination of asset swap is likely to be mild, but investors may be disappointed that BASF retains a low-growth business it wanted to exit," Paul Walsh, analyst at Morgan Stanley, said in a research note.
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