European shares flat

European shares ended flat near 29-month highs on Friday, with mining stocks among the top fallers after China once again tightened monetary policy in an attempt to rein in inflation. A report citing European Central Bank policymaker Lorenzo Bini Smaghi repeating its readiness to raise interest rates if needed also weighed and the FTSEurofirst 300 ended down 0.01 percent at 1,187.03 points.
It was the fifth straight day the index has closed at or near 29-month highs but some said it was due a retreat. "People are now expecting rate rises sooner rather than later," said Robert Quinn, chief European strategist at Standard & Poor's. "Any talk about raising rates sooner than expected will pull the market back." Earlier, China had stepped up its inflation battle by raising lenders' required reserves again to a record 19.5 percent, the fifth increase since October.
The index's flat end to the week comes ahead of a long US holiday weekend and against a corporate earnings season backdrop that on Friday focused on UK-listed mining firm Anglo American. The China news and initial copper price falls hit the miner, down 2 percent, as did what Liberum analysts described as a "slightly stingy" dividend and news it would not sell its troublesome Tarmac unit outright.
Instead of exiting the UK construction materials business completely, Anglo American agreed to set up a joint venture with French cement maker Lafarge, which it planned to exit gradually. By the close, the STOXX Europe 600 Basic Resources index had fallen 1.3 percent, led by Anglo American and other large base metals-focused miners including BHP Billiton and Rio Tinto, both down more than 2 percent.
Leading the downside across all sectors, however, was Portuguese retailer Jeronimo Martins, which ended down 5.7 percent after posting a weak outlook. In spite of the flat end to the day, technical analysts at Trading Central in Paris said they remained bullish on the ESTOXX 50, citing an initial target of 3,100 points, against Friday's close of 3,068 points.
A continued bullish tone was still apparent in US stocks before the Europe close, with the Dow Jones industrial average, S&P 500 and Nasdaq composite all up between 0.2 percent and 0.4 percent. Leading European stock gainers were the world's two largest cement-makers, Lafarge and Swiss-based Holcim, both of which ended up more than 3 percent after Lafarge's UK tie-up, debt plans and demand outlook were well received by the market.
Of the 273 STOXX 600 companies reporting fourth-quarter results in the current earnings season, 49 percent have met or beaten expectations and 51 percent have missed, according to Thomson Reuters StarMine data. Out of the 137 firms to report so far, earnings have negatively surprised by an average 0.6 percent, StarMine data showed, while those still to report are expected to show an average 1.7 percent slip from forecast estimates. The worst performing sector so far has been utilities, according to StarMine, with all eight firms to report missing expectations by an average 42 percent. Top winner has been the IT sector, with an average beat of near 11 percent.