London: European shares were flat in early trade on Thursday, with weakness in banks and miners just offsetting gains in defensive drugmakers, as investors stayed cautious ahead of further corporate earnings from the US.
The pan-European FTSEurofirst 300 index was up 0.01% at 1,052.62 points. In the previous session the index fell from a 15-month high, and posted its biggest one-day percentage drop in one and a half months.
Banks were among the biggest sector drags, as fears over monetary tightening in China resurfaced, while worries over Greece’s fiscal problems put pressure on the country’s banks.
Barclays, BBVA, Commerzbank and Deutsche Bank were off 0.1 to 1.6%.
In Greece, Alpha Bank, Bank of Greece and Bank of Piraeus shed 0.8 to 5.1%.
China’s annual gross domestic product growth accelerated in the fourth quarter of last year to 10.7% from 8.9% in the third quarter, setting the stage for further monetary tightening and putting it on course to overtake Japan as the world’s second-largest economy.
Later in the session investors will await quarterly earnings from Goldman Sachs, while Google will release earnings after European markets close.
“The market is going to be very cautious. We need to see more results from the US to see how we’re really doing,” said David Buik, partner at BGC Partners.
Mining companies fell, pressured by weaker metals prices. Anglo American, BHP Billiton, Kazakhmys and Xstrata shed 0.4 to 1.9%.
Across Europe, Britain’s FTSE 100 rose 0.3%, Germany’s DAX was up 0.3% and France’s CAC 40 advanced 0.5%.
Among the gaining sectors, pharmaceutical firms were stronger. AstraZeneca rose 1.7% as Morgan Stanley upgraded its rating to “overweight” from “equalweight”.
GlaxoSmithKline and Roche added 1.4 and 0.7%, as the sector benefitted from a Republican victory in the US state of Massachusetts on Tuesday, which casts president Barack Obama’s healthcare reform plans in doubt.
Defensive food producers, which benefit from their safe-bet appeal, were also higher. Associated British Foods, Nestle and Unilever were up 0.5 to 1.2%.
Among individual movers, Nokia gained 0.9% after the San Francisco Chronicle said the Finnish company followed Google’s move by offering free navigation on its cellphones. This is likely to hurt key players in the satellite navigation market like Netherlands-based group TomTom, whose shares dropped more than 10% on the news.
Among retailers, Britain’s WM Morrisson fell 1.5% as cautious comments about 2010 and the lack of news on a new chief executive to succeed the Marks & Spencer bound Marc Bolland offset the biggest rise in Christmas sales among Britain’s top four grocers.
Within the sector, Ahold rose 0.2% after the Dutch retailer posted better-than-expected fourth-quarter sales with promotions helping to boost sales volumes and offset weak consumer spending and falling food prices.
On the macroeconomic front, a rise in output helped German manufacturing activity expand in January at its fastest rate since May 2008, supporting growth in the private sector of Europe’s largest economy.