European shares were mixed on Tuesday as pleasing news on car sales for Volkswagen and DaimlerChrysler lent support but Interbrew slipped after disappointing revenues. By 0840 GMT, the FTSE Eurotop 300 index <.FTEU3> was 0.02 percent up at 980 points, while the narrower DJ Euro Stoxx 50 index <.STOXX50E> was up 0.2 percent at 2,765. Markets remain bedevilled by doubts over the sustainability of earnings growth in the quarters ahead. "There will be room for equity gains as investors realise that a lot of negative news has been priced in since March and that all this bad news can't happen concomitantly," said Eric Mijot, head of equity strategy at SG Asset Management. The benchmark Eurotop 300 index is trading around the middle of a four-month trading range -- between 951.95 points and 1,030.86 points -- as worries over the strength of economic growth and corporate profits, monetary tightening and security risks prevented markets from making a headway. As the second-quarter reporting season gets off the ground, solid earnings and reassuring outlooks should lure investors back to equity, Mijot said.
"The problem is that earnings expectations are very high for the second quarter, and slightly lower for the second half of the year and beyond," Mijot said. "Investors need to see that results do not miss expectations for this quarter and that companies are giving encouraging news for the next quarters," he said. Heavyweights such as Nokia , Electrolux and Astrazeneca in Europe, and Apple Computer , Citigroup and Ford in the United States are all due to hand in quarterly scorecards in the coming few days. Around Europe, the FTSE 100 <.FTSE> was 0.1 percent lower, with the DAX <.GDAXI> up 0.1 percent in Frankfurt, while the CAC 40 <.FCHI> was 0.2 percent firmer and the Swiss blue chip index <.SSMI> was little changed percent. U.S. futures pointed to a weaker opening on Wall Street.
AUTOS, PHILIPS PLEASE
German car giants Volkswagen and DaimlerChrysler rose more than 1 percent each on the back of data showing their new car registrations in June had risen by 6 percent and 5.2 percent, respectively. Autos <.SXAP> rose 1 percent to be the biggest sector gainer. In the technology sector, Philips Electronics helped soothe some worries about the earnings prospects of the global chip industry with better-than-expected quarterly net profit and a forecast of ongoing sales and profits growth in all divisions in the second half of the year. But shares erased earlier gains as analysts pointed at signs of margins pressure due to price competition. Investors are eyeing an earnings update by industry leader Intel later in the day, a day after Merrill Lynch reduced its stance on the global semiconductor sector. "Intel earnings will probably dominate the picture this week and set the tone for the next week or so. If this bellwether can meet or beat expectations investors will likely be more inclined to dip their toes in the water and slowly buy stocks," said Tom Hougaard from City Index. Also among techs, LogicaCMG rallied 4.4 percent in London after Deutsche Bank upgraded its rating on the Anglo-Dutch computer services to "buy" from "hold", saying recent share price weakness offered a good chance to buy. On the downside, shares in Interbrew slipped 3.6 percent after the brewing giant posted internal volume sales growth of 5.5 percent in the first half of the year, a slower rate than the average 7.3 percent expected by several analysts. Britain's pubs group JD Wetherspoon was among the region's top decliners after warning on profits for the second time in three months. Its shares shed 2.6 percent. But shares in Publicis rallied 2.8 percent after the French advertising major ruled out a bid for U.S. peer Grey Global because it made no strategic sense.///