London: European equities slipped for a second straight session on Tuesday, with weaker financial and mining stocks outweighing stronger food producers.
At 2:35pm, the FTSEurofirst 300 index of top European shares was down 0.6% at 1,047.40 points. The index, which fell 0.1% on Monday after six straight session of gains, is up 62% since a low in March 2009.
Financial stocks were among the top losers, with STOXX Europe 600 banking index falling 1.4%.
Standard Chartered, HSBC, Barclays, Lloyds, Royal Bank of Scotland, BNP Paribas and Societe Generale and Bank of Ireland fell 0.9 to 7.8%.
Greek bank shares shed 1.8% after Deutsche Bank cut earnings forecasts for EFG Eurobank, Alpha Bank and National Bank of Greece.
“The market had a good recovery after correction lows and it would be tough in the near term, even though you are still in a cyclical bull market, to just race ahead. People are still cautious,” said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.
“What takes the market higher is fundamentally the perception that earnings are going to go on growing. If that’s happening against the backdrop of perceptions that interest rates will stay low for an extended period, that’s the environment in which you get a cyclical bull market.”
Thomson Reuters Proprietary Research showed that about 240 companies in the STOXX Europe 600 index had reported fourth quarter results, with nearly half reporting earnings above analysts’ expectations.
Miners also lost appeal as copper prices fell 0.5% and zinc dropped 0.6%. BHP Billiton, Anglo American, Antofagasta, Rio Tinto, Xstrata and Eurasian Natural Resources fell 0.8 to 1.9 %.
“A reasonably benign session yesterday on both sides of the Atlantic has given no real directional bias for today,” said Owen Ireland, analyst at ODL Securities.
“Coupled with a lack of economic data, today could well be a day to gauge the strength of traders’ confidence in the recent rally,” he added.
Food producers, generally seen as defensive plays, were in demand. Nestle, Unilever and Danone rose 0.5 to 0.7%.
Drugmakers also gained. Sanofi-Aventis rose 0.7% after the company and Merck agreed to combine the French drugmaker’s Merial unit and Merck’s Intervet/Schering Plough (ISP) to create a leader in the $19 billion animal health market . Merck, however, fell 0.2%.
GlaxoSmithKline rose 0.9%, Novartis added 0.5% and Roche Holding gained 0.7%.
Among individual movers, Airbus parent EADS was down 5.3% after it posted heavy losses in 2009 and scrapped its dividend as charges on its A380 superjumbo and a currency hit swelled already announced charges from cost overruns on the delayed A400M airlifter.
Deutsche Post DHL fell 1.1% as investors had expected a stronger outlook from Europe’s biggest mail and express delivery company. The company said a global economic recovery and cost cuts will help it boost its core profit this year.
Across Europe, Britain’s FTSE 100 index, Germany’s DAX and France’s CAC 40 were 0.3 to 0.5% lower.