Europe's top shares ended the week on a mixed note as investors ignored upbeat US economic data and worried about corporate earnings growth after a gloomy forecast by food retailer Ahold on Friday.
Financial issues also weighed, with German bank HVB Group hit after it said it would fully subscribe to reinsurer Munich Re's 3.8 billion euro (US$4.41 billion) rights issue.
The move, which will cost HVB 500 million euros, sent its shares seven percent lower. Munich Re shed one percent.
The FTSE Eurotop 300 index of pan-European blue chips closed down 0.3 percent weaker at 917 points, but ended the week 1.9 percent higher than it started it. The narrower DJ Euro Stoxx 50 index shed 0.3 percent to 2,551.
Sentiment was mixed. Relief that the earnings season had so far sprung no nasty surprises was offset by perceptions that much of the good news was already priced into shares after a strong market rally during the past two quarters.
Strategists said they still expected a return to top-line growth to be the next driver of profits and that upgrades to earnings forecasts should fuel fresh gains in the final quarter of the year and early next year.
"Upgrades to earnings expectations over the remainder of this year will continue to boost the performance of US, and consequently global equities," said JP Morgan global equity strategist Abhijit Chakrabortti.
But even if 2003 was expected to go down as a relatively good year for many companies, Chakrabortti along with other strategists warned that the sustainability of profit growth was far from assured.
"In 2004, we believe the consensus will revert to its usual pattern of steady earnings downgrades throughout the year" he said, adding that the prospect of interest rate increases from the Federal Reserve and decelerating earnings momentum relative to this year would result in weaker equity performance.
Around Europe, London's FTSE 100 closed 0.1 percent higher but the CAC 40 ended 0.1 lower in Paris and the Swiss blue chip index shed 0.3 percent.
Frankfurt's DAX slipped 1.7 percent, weighed by carmakers and other exporters after the euro strengthened again against the dollar.
In New York, the Dow Jones industrial average was 0.7 percent lower and the technology-laced Nasdaq Composite Index was down 1.8 percent.
Investors largely shrugged off the University of Michigan consumer sentiment preliminary survey for this month, which topped economists' forecasts to come in at 89.4. The report added to hopes the US economic rebound is gaining strength and followed an upbeat housing report and a strong rise in a manufacturing survey index for the Philadelphia area.
Dutch retail giant Ahold led blue chips down, off 4.3 percent after warning of weak 2003 trading and lower sales due to increased competition and higher costs. The announcement raised new investor worries about the group's future funding.
However, baby food maker Numico surged 9.8 percent on news it was selling its General Nutrition Cos unit for US$750 million as investors welcomed its retreat from a costly foray into the US health supplements market.
Carmakers DaimlerChrysler and Renault, which both report quarterly results early next week, shed 1.7 percent and 0.8 percent, respectively.
Technology issues were a bright spot, with Finnish handset manufacturer Nokia up three percent to recoup some of the losses suffered on Thursday after the Finnish group's cautious outlook.
But German software giant SAP fell again despite investment banks CSFB and UBS raising their respective target price on the stock, as investors deemed shares still too pricey after a 20-percent plus rally since the start of the month.
Smaller cap Netgem surged 31.6 percent after BT Group Plc picked the French company to supply set-top boxes for its new Internet and digital TV service. Terms were not disclosed. But BT shares were 2.8 percent lower.
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the
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