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Europe: Shares sputter near highs but Opec disappointment hits oil stocks

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[MILAN] European shares struggled for direction on Thursday with investors hunting for fresh catalysts as a blistering earnings season that helped stocks surge to new highs nears its end.

An Opec meeting in Vienna that disappointed some investors failed to move broader indexes but sent oil prices lower, making the energy sector the biggest sectoral faller in the region.

The Organization of the Petroleum Exporting Countries decided to extend cuts in oil output by nine months to March 2018 in a bid to drain a global glut that has depressed markets.

But some were hoping for more and that sent oil prices falling 4 per cent, hitting energy stocks with Oil majors BP , Total and Eni fell between 0.9 and 1.9 per cent.

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In the same sector, Petrofac fell 30 per cent after the British oilfield services firm suspended its chief operating officer in response to a British investigation into alleged bribery, corruption and money laundering.

The pan-European Stoxx index fell 0.06 per cent, staying close to 21-month highs, while Germany's DAX fell 0.17 per cent after hitting an all-time high earlier in May.

After the recent run that saw record inflows into the region, some investors have turned cautious on prospects for more gains. Milan-based fund manager Anthilia Capital in Milan downgraded its exposure to euro zone stocks even though the European economy remained strong thanks to global demand.

First-quarter results have been surprisingly strong. More than four out of five companies in Europe have already reported with 65 per cent of them beating earning expectations.

Some more companies reported results on Thursday with Britain's Intermediate Capital Group jumping 14 per cent after its full-year results, and GVC Holdings also rose 2 per cent after a first-quarter update.

British media group Daily Mail and General Trust dropped 6.8 after it warned that revenue in its information business would be lower than previously forecast.

James Butterfill, head of research and investment strategy at ETF Securities, said that now the earnings season is over the next focus points included the US Federal Reserve, the ECB meeting next month and UK's general election.

French aerospace supplier Zodiac gained 0.3 per cent after accepting a reduced offer from aero engine maker Safran, following a series of profit warnings. Safran's shares rose 3 per cent.

Analysts at Barclays said the offer was better than expected, but they had doubts about the strategic rationale of the deal. "Having high conviction in forecasts is a challenge given Zodiac's enduring volatility," they said in a note. REUTERS