Europe: Shares give up gains

[LONDON] European shares turned lower after a strongly start on Tuesday, with Germany's DAX briefly touching a new peak for 2016, after sentiment was knocked by mixed earnings on Wall Street and in Europe.

The pan-European STOXX 600 index ended down 0.4 per cent. Germany's DAX ended flat after earlier touching a new peak for 2016 of 10,827.72 points.

The German stock market outperformed after Ifo data showed that German business morale had improved unexpectedly in October, suggesting company executives have become more optimistic about the growth prospects for Europe's largest economy.

But other parts of the market were more volatile. Italy's Banca Monte Paschi dei Siena ended 15 per cent lower, having at one stage been 25 per cent higher, after it announced a new strategic plan.

In a major gamble by a new CEO appointed last month to save the world's oldest bank, the lender said it would launch a debt-to-equity conversion and a capital increase, as well as lay off a 10th of its staff, shut branches and sell assets to win investor backing.

"We think that Monte dei Paschi's 2016-19 strategic plan is doable but entails significant execution risk," analysts at BBVA said in a note.

Top faller on the STOXX 600 was semi-conductors group AMS slumped by nearly 13 per cent after it gave a weak Q4 outlook, while some analysts were cautious over AMS' mid-term targets.

"The significantly weaker than expected guidance for Q4 2016, as well as the company's volatile track record, are not supportive regarding investors' confidence in reaching this ambitious medium term target, in our view," said analysts at Baader Helvea.

Dassault Systemes and Finnish refiner Neste also fell after results, down seven per cent and 5.6 per cent respectively.

European shares turned lower after a positive start, dropping along with U.S. stocks, which were also hindered by weaker earnings.

In Europe 40 per cent of companies have missed quarterly earnings expectations this season, Thomson Reuters Starmine data shows, compared to just 22 per cent on the US S&P 500 Among risers, UPM surged 10.8 per cent after the paper maker posted higher profits and flagged restructuring plans, while Luxottica climbed 4.4 per cent after the Italian eyewear maker reported higher revenues and confirmed its 2016 outlook.

Diversified miner Anglo American also rose sharply after the company's production update. It rose 4.5 per cent and helped to lift the European basic resources sector to its highest level since Aug 2015.

REUTERS