Europe: Shares recoup losses on weaker euro as Steinhoff tanks

[MILAN] European shares recovered most of their earlier "risk-off" losses on Wednesday, with an easing euro and a positive open on Wall Street offsetting falls in richly valued tech stocks.

The pan-European Stoxx 600 index ended down 0.1 per cent after losing as much as 1 per cent before consumer staples and other defensive stocks outbalanced struggling financial shares.

"The key factor (for the recovery) today was the euro", said Stephane Barbier de la Serre, a strategist at Makor Capital, adding that investors are cautiously following the lead of the common European currency in the absence of strong bullish or bearish convictions as the year-end nears.

Euro zone exporters, which make most of their revenues in dollars, typically get an accounting boost with a weaker euro.

The Stoxx index was weighed down by a 63 per cent collapse in heavily-shorted furniture retailer Steinhoff on worries over the disclosure of accounting irregularities at the South African company.

The group said it would launch an investigation, announced the departure of its chief executive and postponed full-year results.

"We fear there is more to come," said Kepler Cheuvreux analyst Jürgen Kolb, who put his hold rating under review.

"It is absolutely unclear what the final outcome will be. The company has grown exceptionally with numerous acquisitions and the level of transparency on the numbers was extremely weak," he said.

Tech stocks fell 0.6 per cent. The sector has come under pressure recently as worries that a chip market boom could soon come to an end has dented sentiment towards a sectors that in Europe has been the best performer so far this year.

Shares in chipmakers STMicro, AMS and Infineon fell 3.7 per cent, 5.9 per cent and 1.5 per cent.

Other top fallers included UK's Saga, down 21.4 per cent to an all-time low after a profit warning, Elior Group , down 7 per cent following results, and Hays, down 3.8 per cent after a downgrade to "sell" at Deutsche Bank.

A takeover deal sent shopping centre Intu Properties surging 13.6 per cent. Hammerson, the buyer shed 6.2 per cent after agreeing to the 3.4 billion pounds deal.

REUTERS