* FTSEurofirst 300 index steady near two-week low
* ARM Holdings slips on downgrade, tech shares fall
* Hennes & Mauritz up on lower-than-expected sales drop
By Atul Prakash
LONDON, Jan 15 European shares steadied on
Tuesday after falling for three straight sessions and touching a
two-week low, with tech stock losses offsetting gains for
retailers after a sales update from Hennes & Mauritz.
Shares in the world's second-biggest fashion retailer
advanced 3.8 percent after it reported a 2 percent drop
in December sales at stores open a year or more. The mean
forecast in a Reuters poll had been for a 4 percent drop.
The European retail sector index was the top gainer,
adding 0.7 percent by 1122 GMT, while the FTSEurofirst 300 index
was flat at 1,159.98 points after touching 1,156.75,
the lowest since Jan. 2. The index, which hit a 22-month high
earlier this month, has risen 22 percent from a June low.
"We are quite positive for risk assets in 2013 as we are
seeing a better environment for global growth," said Oliver
Wallin, investment director at Octopus Investments, which
manages about $4.8 billion.
"It's possible the market got over-excited in the wake of
the U.S. fiscal cliff agreement and might pull back a little bit
over the short term. But our anticipation is that these kind of
dips are going to be shallow and short-lived and would provide
opportunities to buy stocks at more attractive price points."
Analysts said fourth-quarter earnings could provide the near
term direction to the market, which is looking for fresh
catalysts to scale new highs.
"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," said Frank Bonsee, equity sales trader at ABN Amro.
Major U.S. companies announcing results this week included
heavyweights such as Goldman Sachs, JPMorgan Chase
, Bank of America, Citigroup and Intel
announcing their results. European earnings will gather
pace later this month.
Analysts said investors were cautious in placing strong bets
as several issues still remained in the background and could
flare up any time.
"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," Keith Bowman,
equity analyst at Hargreaves Lansdown, said.
Federal Reserve Chairman Ben Bernanke 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 0.1 percent at 2,711.93 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 early this month. This would be a normal pull back in an
uptrend," said Roelof-Jan van den Akker, senior technical
analyst at ING Commercial Banking.
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 4.3 percent, was
the biggest decliner. The index dragged down the European
technology index, the top sectoral decliner in Europe
and down 0.8 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.
On the upside, Burberry Group rose 4.1 percent as
the British luxury brand posted a 9 percent rise in
third-quarter underlying revenue, prompting BofA Merrill Lynch
to upgrade its rating to 'buy' from 'neutral'. ID:nASN0001F4]