* FTSEurofirst 300 falls 0.6 pct, ESTOXX50 down 1.1 pct
* ABI slumps 7.8 pct as Mexican deal hit by U.S. lawsuit
* Ericsson up 7.6 pct as results show signs of turnaround
* Most analysts see any near-term market as short-lived
By Sudip Kar-Gupta
LONDON, Jan 31 European equities fell on
Thursday, hit by drops in brewing group AB Inbev and
oil major Shell, and some expected further weakness in
the near term.
The pan-European FTSEurofirst 300 index declined
0.6 percent to 1,164.53 points, while the euro zone's blue-chip
Euro STOXX 50 index fell 1.1 percent to 2,702.98
AB Inbev slumped 7.8 percent to take the most points off the
broader index after the U.S. Justice Department filed a lawsuit
seeking to stop it from a full takeover of Mexican brewer Grupo
"What it loses is the upside from acquiring Modelo. At the
time, the share price went up 10 percent. The shares have been
weak recently because of anxiety over this," said drinks analyst
Trevor Stirling at Bernstein Research.
Royal Dutch Shell also retreated 2.9 percent after its
fourth-quarter results undershot expectations.
Rupert Baker, who handles European equity sales at Mirabaud
Securities, said there could be a near-term pull back on
European equity markets but he expected an eventual recovery.
"The market has had a strong run and it's now topping out a
bit. But there is still a bullish underbelly which has not been
derailed yet," he said.
Mobile telecom gear maker Ericsson outperformed
the broader market fall by surging 7.6 percent to the top of the
FTSEurofirst 300, after a sales recovery at its key networks
unit raised hopes of a turnaround at the group.
The FTSEurofirst and Euro STOXX 50 indexes are both up by
around 3 percent since the start of 2013, while Germany's
benchmark DAX has edged up by 2 percent and France's
CAC-40 has gained around 2.5 percent.
European stock markets rose sharply in the second half of
2012, with the Euro STOXX 50 gaining 30 percent, after the
European Central Bank pledged to protect the euro currency from
a sovereign debt crisis that hit the likes of Greece and Spain.
Many analysts still expect European equity markets to rise
gradually over the course of 2013, helped by prospects of a
recovery in the global economy, with the FTSEurofirst 300 having
hit a near two-year high of 1,178.55 points earlier this month.
"I wouldn't be surprised to see the FTSEurofirst 300 tick
marginally higher in February as the general economic picture
continues to improve," said Mike McCudden, head of derivatives
at stockbroker Interactive Investor.
Technical indicators suggest the Euro STOXX 50 can recover
from any near-term pull backs.
The Euro STOXX has fallen below the 70 point level on its
relative strength index (RSI), meaning it is no longer in the
technically "overbought" area above 70 points that is often used
by some traders to sell off an index.
However, some investors said now might be a good time to
book profits on gains on equities, as the corporate earnings
season from Europe's top companies gets underway.
"Are we minded to take some money off the table? Yes, we've
taken a bit of profit on some of the stocks," said Scott Meech,
co-head of European equities at Union Bancaire Privee (UBP).