European shares end lower after 5-day winning run

By Atul Prakash

LONDON (BestGrowthStock) – European equities ended lower on Monday after advancing in the previous five sessions as weaker drugmakers and food producers put pressure on the market, but analysts said overall momentum remained positive.

The FTSEurofirst 300 (.FTEU3: ) index of top European shares closed 0.3 percent lower at 1,023.15 points after rising earlier in the session to a high of 1,028.54, the highest since February 3. Volumes were about 85 percent of its 90-day daily average.

GlaxoSmithKline (GSK.L: ) dragged down drugmakers. It fell 2.6 percent after two U.S. drug safety reviewers recommended that diabetes drug Avandia be pulled from the market.

Other pharma companies also slipped, with AstraZeneca (AZN.L: ), Merck (MRCG.DE: ), Novartis (NOVN.VX: ), Novo Nordisk (NOVOb.CO: ), Roche Holding (ROG.VX: ) and Sanofi-Aventis (SASY.PA: ) falling 0.1 to 1.3 percent.

“We had pretty good gains over the past few trading sessions, so there is no doubt that we are going to occasionally pause for breath,” said Henk Potts, analyst at Barclays Wealth.

“The recovery that we have seen recently just shows that there is still demand for equities in the current investment environment. The macro environment has stabilized a little bit and concerns over Greece have been set aside, in the short term at least,” he added.

Greece’s central banker said the country was prepared to take extra fiscal measures to make sure it meets its deficit-cutting targets, but said financial markets were over-reacting to its financial woes.

Greece’s deficit rose to 12.7 percent of gross domestic product in 2009, way above the EU’s cap of 3 percent, and Athens needs to sell some 53 billion euros of debt this year, including at least 20 billion euros in April and May.

Food producers were also among leading decliners, with Unilever (ULVR.L: ), Danone (DANO.PA: ) and Kerry Group (KYGa.I: ) falling 0.9 to 2 percent.

Energy stocks also came under pressure as crude oil prices slipped from six-week highs. Royal Dutch Shell (RDSa.L: ), BG Group (BG.L: ), Repsol (REP.MC: ) and Total (TOTF.PA: ) shed 0.3 to 0.9 percent.


But financials were among the top gainers, with Standard Chartered (STAN.L: ), HSBC (HSBA.L: ), Barclays (BARC.L: ), Lloyds (LLOY.L: ), Royal Bank of Scotland (RBS.L: ), BNP Paribas (BNPP.PA: ), Societe Generale (SOGN.PA: ), Credit Agricole (CAGR.PA: ) and Natixis (CNAT.PA: ) rising 0.7 to 4.9 percent.

Some optimism emerged following data on Friday showing U.S. consumer prices edged higher in January, while prices excluding food and energy fell for the first time in 27 years, supporting the Federal Reserve’s contention it would keep its benchmark interest rate low for an “extended period.”

Last week’s surprise rise in the Federal Reserve’s emergency lending rate initially spooked investors, some of whom feared the move would bring forward broader policy tightening.

A group of U.S. business economists also raised their forecast for economic growth over the coming year, saying economic expansion was firmly on track, a survey released on Monday showed.

“Overall, stock markets are still positively positioned for further gains medium-term,” said Tim Hughes, head of sales trading at IG Index.

“There is scope for some sort of pullback in the days ahead, but this will most likely simply pull in buyers who have been caught on the hop by the speed of the recent rise.”

Miners were also in positive territory on hopes of a global economic recovery. Antofagasta (ANTO.L: ), Rio Tinto (RIO.L: ), Xstrata (XTA.L: ) and Eurasian Natural Resources (ENRC.L: ) rose 0.4 to 3 percent.

Among individual movers, telecoms gear group Alcatel-Lucent (ALUA.PA: ) gained 5.1 percent after Bofa Merrill Lynch puts the company on its list of recommended buys.

German construction company Bilfinger Berger (GBFG.DE: ) slipped 6 percent after the company said late on Friday it has widened the scope of its investigation in connection with an urban rail project in Cologne.

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European shares end lower after 5-day winning run