LONDON Jan 30 European shares suffered their
biggest daily drop this month after gloomy earnings and weak
U.S. economic data hit sentiment on Wednesday and left some
positioning for further falls in the near-term.
A profit warning from Saipem caused shares in
Europe's biggest oil services company to fall 34.3 percent and
sent shockwaves through the oil & gas sector.
Imperial Tobacco, meanwhile, shed 3.9 percent after
guiding for lower profits.
They both weighed on the pan-European FTSEurofirst 300
index, which provisionally closed 0.6 percent lower at
1,170.78 points -- retreating from 2-year highs hit the day
before and chalking up the worst daily loss since Dec. 28.
It does, however, remain on course to record its best month
since July last year.
The index extended losses in the afternoon as data showed
the U.S. economy unexpectedly contracted in the fourth quarter,
suffering its first decline since the recession ended more than
three years ago.
"Surely this is a little bit of a wake up call to this
never-ending market rally," Dermot Corrigan, head of derivatives
trading firm Qubed Derivatives, said. "The (cash) market is well
overbought, so a correction would be healthy."