Euroshares close lower, snapping winning streak on earnings, Fed jitters

Euroshares close lower, snapping winning streak on earnings, Fed jitters

	Published : Tue, 30 Oct 2007 17:35 By : Agencies Print this Story

LONDON (Thomson Financial) - Europe's leading exchanges ended lower, snapping a three-session winning streak, after a number of disappointing quarterly results led by UBS and Michelin, with investors also nervous ahead of a US Federal Reserve decision on interest rates.

The Dow Jones STOXX 50 Index was down 20.48 points or 0.5 pct to an unofficial close of 3,852.31, while the STOXX 600 shed 1.7 points or 0.4 pct to 384.90.

'There's a little bit of nervousness ahead of the interest rate decision from the Fed tomorrow,' said Henk Potts, equity strategist at Barclays Global. 'We believe, along with the market, that we are going to get a 25 basis point cut.'

Potts said investors were also a little unsettled by a Wall Street Journal article that suggested a Fed decision on whether to cut rates or keep them on hold maybe be a closer call than the market thinks.

The paper said a fragile economic and investment climate means disappointing the market on rates could be more damaging than usual. On the other hand, the central bank has take into account the likely inflationary impact of another cut.

The Federal Open Market Committee, the central bank's monetary policy body, will announce its interest-rate decision at 6.15 pm GMT. Its key rate currently stands at 4.75 pct.

Turning back to Europe, shares in UBS fell 1.3 pct after the investment bank said its exposure to sub-prime residential mortgage backed securities (RMBS) stood at 16.8 bln usd as of the end of Sept 2007.

Earlier, the bank reported its first quarterly loss in 10 years due to substantial losses and writedowns in trading positions related to the US subprime mortage market.

Elsewhere, automotive suppliers Michelin and Continental were in focus.

Michelin fell 6.6 pct after the tyre maker's third-quarter sales growth fell short of analyst expectations although the company sees a return to form in the fourth quarter.

Rival Continental AG also fell 1.9 pct as its largely in-line quarterly results were overshadowed by its decision to carry out a capital increase of about 14.5 mln new shares to fund its takeover of Siemens VDO automotive unit.

The subscription price for the capital increase has been set around 101 eur per share, a trader close to the process said.

Mark.cotton@thomson.com

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