* FTSEurofirst down 0.3 percent, off two-year highs
* Earnings worries hit Saipem, Imperial Tobacco, Antofagasta
* Weak Spanish, Swiss data weigh on index
* Swedbank rises on higher dividend payout ratio
By David Brett
LONDON, Jan 30 European shares fell from
two-year highs on Wednesday, dragged lower by concerns over
earnings in the tobacco and oil services sectors, including a
profit warning from Italy's Saipem.
By 1149 GMT, the FTSEurofirst 300 fell 3.23 points,
or 0.3 percent to 1,174.56, with poor economic data from Spain
and Switzerland also weighing.
"There is an optimism in the market which has not been
reflected in either corporate earnings or macroeconomic growth
numbers," Wouter Sturkenboom, strategist at Russell Investments,
That potentially misplaced optimism was reflected in 14-day
relative strength indicators (RSI), which for most major
European markets are now in "overbought" territory.
Shares in Saipem were the major casualty, tumbling
36 percent after the oil services firm forecast a sharp fall in
earnings following Tuesday's market close.
Goldman Sachs placed its forecasts and rating for Saipem
under review and warned of a potential read-across for the rest
of the sector.
Peers including London-listed Petrofac, France's
Technip and Norway's Subsea 7 fell as much
as 6.5 percent while ENI, which controls Saipem, fell
Imperial Tobacco fell 4.8 percent after it said it
expected first-half adjusted operating profit to be down year on
Miner Antofagasta, shed 7.8 percent, hit by a
weaker than expected outlook, prompting BofA Merrill Lynch to
cut its rating to "neutral".
The wave of downbeat updates from companies was followed by
weak economic data, which helped push most sectors on the Stoxx
600 into negative territory.
Spain's economy sank deeper into recession in the fourth
quarter of 2012, while Switzerland's leading indicator showed
economic momentum slowed more than expected in January.
The data prompted profit taking in the European banking
sector, which had made a strong start to 2013 having
risen 9.5 percent so far this year on an easing of euro zone
Bucking the trend, Swedbank rose 8 percent after
raising its dividend ratio and larger Swedish rival Nordea
rose 2 percent on solid earnings.
"Any indication of return of capital will be treated very
favourably (by markets)... and that is an indication of an
early-stage recovery," Guy Foster, head of portfolio strategy at
Brewin Dolphin, said.
Europe has enjoyed a robust if unspectacular start to the
earnings season with 57 percent of companies beating or meeting
analyst expectations, though quarterly earnings have contracted
0.7 percent year-on-year, according to TRS data
Some traders were cautious ahead of the Federal Reserve
meeting and jobs data in the United States on Wednesday.
Jawaid Afsar, a sales trader at Securequity, recommended
short-selling index futures around the data if only to unwind
the overbought state of the market.