* 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 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
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)