* FTSEurofirst 300 down 1.2 percent
* Fed hints at scaling back asset purchases
* Miners recoil on worries over growth
* Financials fall; insurers knocked by mixed results
By David Brett
LONDON, Feb 21 European markets opened lower on
Thursday after U.S. Federal Reserve minutes suggested the
central bank may stop printing the money that has helped to
drive the recent rally in equities sooner than expected.
Minutes of the latest Fed policy meeting published late on
Wednesday showed a number of officials think the central bank
might have to slow or stop buying bonds before seeing the pickup
in hiring the programme is designed to deliver.
"The more important part of the minutes is the focus of
excessive risk-taking and the potential for instability. There
have been several members of the Fed talking about creating a
froth in risky assets (the derivative cost of the easy monetary
policy)," Steen Jakobsen, chief economist at Saxo Bank, said.
"That froth in the risky assets has probably been fuelled to
a large extent by the central banks, but to say it is totally
overdone and a replay of 2008 is an exaggeration," he said.
By 0836 GMT, the FTSEurofirst 300 was down 13.76
points, or 1.2 percent, at 1,154.96, led lower by markets in
southern Europe which had enjoyed the most
gains since support from central banks was announced in the
second half of 2012.
The euro zone blue chip index shed 1.3 percent,
failing to break technical resistance at 2,670, corresponding to
its 50-day average. This was a sign buying momentum remained
weak and the index may remain stuck in the 2,590-2,670 range
where it has been trapped for the past two weeks.
At the sector level miners were the worst
performers, down 2.3 percent.
Basic resource stocks littered the top fallers list as the
threat of stimulus being taken away hurt their already
precarious growth outlook and underlying commodity prices.
Global miner BHP Billiton extended the previous
session's losses, down 2.7 percent, as investment banks began to
downgrade their estimates for the company the day after BHP
posted heavy losses.
Commodity-related assets also continue to be dogged by
unconfirmed rumours of a struggling hedge fund ditching assets.
Financials , which have been at forefront of
recent gains, were weaker too as investors targeted profit-
taking in some of those potentially-bloated riskier assets.
Europe's No. 2 insurer, AXA, shed 2.6 percent
after reporting a 4 percent fall in 2012 earnings.
Reinsurer Swiss Re, however, rallied 2.8 percent
after posting full-year 2012 earnings ahead of estimates.
And if a firm's results are not good then it can always
sweeten investors with the promise of cash returns.
Defence firm BAE Systems, which posted a 6 percent
slump in 2012 profit, rose 4.2 percent after announcing a
three-year share repurchase programme of up to 1 billion pounds
and increased its 2012 dividend.
With the European earnings season approaching the halfway
mark, 39 percent of the STOXX Europe 600 companies that
have reported so far miss consensus estimates, StarMine data
"Equity investors have looked past weak company fundamental
growth, instead discounting optimistic forward expectations.
This leaves the equity market in a precarious position,"
Barclays said in a note.
"If growth slows, then Fed fears will ease, but earnings
growth will not accelerate as expected. If growth proves
resilient and inflation risks increase, then pressure will rise
on the Fed to taper purchases," it said.