LONDON, July 1 - European shares were mixed with a weaker bias in early trade on Tuesday with German software maker SAP hit by a broker downgrade and Dutch retailer Ahold up on news an accounting probe at a U.S. unit had ended. Vivendi Universal was another resilient performer, edging up 1.2 percent as the media giant started reviewing six offers for its entertainment assets, fuelling hopes of a debt-trimming deal soon. By 0711 GMT, the FTSE Eurotop 300 index <.FTEU3> was down 0.4 percent at 847 points while the DJ Euro Stoxx 50 index <.STOXX50E> lost 0.1 percent to 2,417 points.
Trading was expected to be quiet in the run-up to Friday's Independence Day holiday in the United States, with the second-quarter earnings season officially kicking in next week. European markets rose 11 percent between March and June, signing their biggest quarterly rise since the final quarter of 1999 with strategists predicting that nasty surprises in second quarter earnings could trigger sharp market downswings. But Nomura global strategist Anais Faraj said three years of market downturn and glum corporate news had made investors cautious and that most of the bad news for the upcoming quarter had already been discounted. "There will be an additional five percent correction that will create the value at which people will be coming in again, giving the way to another rally by the end of the summer when all second-quarter earnings are out," he said.
"I believe we are in a short-term bullish trend, of one year maybe, but this will be purely liquidity-driven as investors don't seem to believe in a quick recovery and no one has priced in economic growth." "If we do get one (economic recovery), it will kick in the market's next round of recovery." Eyes will be riveted on the U.S. Institute for Supply Management's nationwide manufacturing activity index for June, due out at 1400 GMT, which economists see showing a marginal expansion in manufacturing activity. In New York on Monday, the Dow Jones industrial average <.DJI> closed 0.04 percent lower at 8,985 points, and the tech-laden Nasdaq Composite <.IXIC> edged down 0.15 percent at 1,623 points.
AHOLD LEAD GAINERS
Ahold rose nearly five percent with investors shrugging off news that an internal legal investigation at the unit was continuing after the company said a forensic accounting probe at a U.S. unit had been completed. Britain's biggest brewer Scottish & Newcastle Plc was another climber, up 2.5 percent after it reported a 15 percent rise in annual profits and said trading in May and June had been more encouraging than earlier in the year. On the downside, French insurer Axa sagged 0.3 percent despite saying it made a net loss of 2.587 billion euros under U.S. accounting rules in 2002, a figure that stands below an estimate of 2.9 billion euros given by the company in April.
. Axa also said it had restated its 2001 U.S. GAAP net income to reflect additional asset impairments to the tune of about 1.1 billion euros. SAP fell 2.5 percent after JP Morgan cut its investment rating on the stock to to "neutral" from "outperform", according to market sources. JP Morgan sees fair value at 105 euros per share, they added.//