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Europe: Shares fall slightly as Ericsson slumps
[LONDON] European stock markets fell slightly on Wednesday with Sweden's Ericsson slumping to eight-year lows after issuing a profit warning.
The STOXX 600 index fell 0.5 per cent, losing ground for the second straight session. So far this year the index is down 7.4 per cent.
Germany's DAX also fell 0.5 per cent, while Britain's blue-chip FTSE 100 index and the FTSE 250 mid-cap index FTMC both dropped around 0.7 per cent.
Telecoms equipment maker Ericsson dropped 20 per cent to its lowest point since 2008 after warning that its third-quarter profit would be "significantly lower" than expected after a downturn in its mobile broadband business had accelerated.
The world's biggest maker of mobile network equipment reported a 94 per cent plunge in quarterly operating profit and tumbling sales at its core networks division.
"They're near the bottom of the pile in terms of mobile now, in the age of Apple and Samsung, Ericsson don't really have a look-in," Jonathan Roy, advisory investment manager at Charles Hanover Investments, said.
"They haven't really come up with any new or exciting products, so I wouldn't be surprised to see them go further down."
Nokia also dropped, down 5.1 per cent, set for its biggest daily loss since June 27.
Among the top risers, however, Deutsche Lufthansa gained 4.3 per cent after an upgrade from Kepler Cheuvreux.
UK staffing firm PageGroup extended its gains from the previous session, up 3.3 per cent following a spate of target price upgrades. The company reported a set of better than expected results in the previous session.
"Trading in the third quarter was better than expected as demand in the UK held up better than feared," analysts at Barclays said, adding that they expected a more gradual decline in demand over 2017 and 2018.
Italian lenders outperformed a flat bank sector, with UBI Banca, Banco Popolare and UniCredit up between 2.4 and 6 per cent, after an upbeat note from Citi. "Asset quality is starting to recover and the main sector issues are well-known and reflected in current low valuation, due to fear on system stability," Citi said in a note.
Italian banks have been among the worst performers in their sector this year on concerns over capital shortfalls and a mountain of bad loans.