European shares steady near two-week low, H&M gains
* FTSEurofirst 300 index flat after 2-week low
* ARM Holdings top decliner on broker downgrade
* Hennes & Mauritz up on lower-than-expected sales drop
By Atul Prakash
LONDON, Jan 15 (Reuters) - European shares steadied in the morning session on Tuesday, with a stronger Hennes & Mauritz leading the retail sector higher on a smaller-than-expected drop in December sales and offsetting weaker tech stocks.
Shares in the world's second-biggest fashion retailer advanced 3.5 percent after it reported a drop of 2 percent in December sales at stores open a year or more. The mean forecast in a Reuters poll of analysts had been for a 4 percent like-for-like sales drop.
At 0941 GMT, the FTSEurofirst 300 index was flat at 1,159.99 points after touching 1,157.13, the lowest since Jan 2. The index posted losses in the previous three sessions after hitting a 22-month high earlier this month.
"We had a very strong run since November. The market appears a bit toppy now and is looking for new triggers to move ... higher. That could be coming from company results in the coming days," Frank Bonsee, equity sales trader at ABN Amro, said.
Investors awaited a slew of U.S. results this week for hints about near-term direction, with heavyweights such as Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup and Intel announcing their results.
"Investors' attention is clearly on the fourth quarter earnings season. It's possible that the degree of cost cutting that we have seen in recent years will be more difficult to carry forward at the same pace," Keith Bowman, equity analyst at Hargreaves Lansdown, said.
"The market still faces a lot of uncertainties. Investors will keep a close eye on Italian elections, while U.S. debt ceiling negotiations would also be in focus."
U.S. Federal Reserve Chairman Ben Bernanke also urged U.S. lawmakers on Monday to lift the country's borrowing limit to avoid a potentially disastrous debt default, warning that the economy was still at risk from political gridlock over the deficit.
The euro zone's blue chip Euro STOXX 50 index was down 0.2 percent at 2,710.99 points and charts suggested that the weakness could continue in the near-term.
"The index looks somewhat sluggish ... For the very short term, there could be some pressure on the index to close the gap created in early this month. This would be a normal pull back in an uptrend." Roelof-Jan van den Akker, senior technical analyst at ING Commercial Banking, said.
Analysts said the market's medium-term bullish trend remained intact, but major indexes and companies could witness choppy moves in the near term, based on new headlines.
Chip designer ARM Holdings, down 4.2 percent, was the biggest decliner. The index dragged down the European technology index, the top sectoral decliner in Europe and down 0.6 percent.
"A downgrade by Morgan Stanley is the biggest issue for ARM this morning. It's reacting to Apple's share movement as well," Bonsee said, referring to recent reports that Apple had cut orders for LCD screens and other parts for the iPhone 5 this quarter due to weak demand. Apple fell 3.6 percent on Monday.
Morgan Stanley said in a note that while it remained very impressed by ARM and its partners' progress, it believed the current absolute share price was not attractive enough for new money. It downgraded the share to "equal-weight.
(Editing by Chris Pizzey, London MPG Desk, +44 (0)207 542-4441)
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