By Eva Kuehnen
FRANKFURT, March 6 (Reuters) – European shares were down at midday on Thursday, led lower by financials after Dutch firm Aegon posted disappointing results, while upbeat earnings from E.ON and retailers lent support.
By 1147 GMT, the pan-European FTSEurofirst 300 index was down 0.2 percent at 1,298.15 points, trimming some of its losses after falling as much as almost 1 percent earlier in the session. The index rallied 1.7 percent on Wednesday.
Shares in Aegon fell 3.5 percent after it reported a 26 percent drop in quarterly net profit, hurt by currency valuations and investment writedowns.
“The report was quite intransparent and the outlook was practically non-existent, and while writedowns were relatively moderate, one could read between the lines that there was still a lot to come,” said Ingo Frommen, head of international equities at German regional bank LBBW.
Dutch financial ING Groep NV fell 3 percent, French insurer AXA dropped 1.9 percent and Germany’s Allianz fell 1.6 percent as a result and the DJ Stoxx Insurance Index was down 1.7 percent.
But banks were the worst drag on the broader market, as persistent concern over the slowing U.S. economy and nervousness before a European Central Bank rate decision and news conference stripped 0.9 percent off the sector.
The Bank of England held interest rates steady on Thursday at 5.25 percent, as expected, but is widely expected to cut them by the middle of the year.
The ECB is also expected to keep rates steady at 1245 GMT. Investors will focus on comments by ECB President Jean-Claude Trichet at the news conference at 1330 GMT.
“We expect that the ECB will raise its inflation forecast for 2008 and 2009,” Frommen said, adding that the ECB would then not be in a position to signal future rate cuts.
“The key question will be: How clearly will the ECB boost or quash investors’ hopes for interest rate cuts?,” Frommen said.
DEFENSIVES ATTRACTIVE
E.ON, the world’s largest utility, rose 3.6 percent and was the strongest positive weight on the European benchmark index.
E.ON’s 2007 results beat market expectations and investors also cheered its higher than expected dividend and a share split, traders said. The DJ Stoxx index of European utilities was up 2.3 percent.
Retailers were among Europe’s top gainers after Carrefour, the world’s No. 2 retailer, and Dutch supermarket group Ahold NV posted strong results, sending their shares up 3.9 and 3.6 percent respectively.
LBBW’s Frommen said that this had made defensive stocks more attractive for investors.
The DJ Stoxx European chemical index rose 1.2 percent, after Dutch chemical group Akzo Nobel NV reported a 43 percent rise in fourth-quarter core profit thanks to cost savings and higher margins.
Akzo shares rose 8 percent, with more than twice the 90-day average daily volume having already changed hands.
Elsewhere, shares in British Airways fell 4.4 percent after it warned that airlines are entering a downward cycle due to global economic weakness and said rising fuel costs would stop it short of next year’s target of 10 percent margins.
Air France-KLM was down 4 percent and Germany’s Lufthansa dropped 2.4 percent.
The oil price struck a new record of $105.96 a barrel on Thursday as a weak dollar helped prices to extend the previous day’s gains.
Around Europe, the UK’s FTSE 100 index fell 0.1 percent, Germany’s DAX index dropped 0.1 percent and France’s CAC 40 declined 0.2 percent.
