European shares weaken, Aggreko leads fallers

Mon Dec 17, 2012 3:36pm IST

* FTSEurofirst 300 down 0.3 percent

* Aggreko drops 16 pct, cautions on 2013 outlook

* KPN shares plunge after dividend cut

By Tricia Wright

LONDON, Dec 17 (Reuters) - European shares fell at the start of what is likely to be a volatile week on Monday given uncertainty over U.S. budget talks.

Temporary power provider Aggreko was the top faller after its latest update.

The FTSEurofirst 300 was down 0.3 percent at 1,129.93 by 0946 GMT, having dipped 0.1 percent in the previous session. Trading volumes stood at 18 percent of the 90-day daily average.

Many in the market believe a deal on the U.S. budget will be struck, but any news to the contrary could open the way to fresh index falls, especially as traded volumes remain thin.

"We're a bit jittery here that there's not going to be significant progress... Ultimately I think we will get a deal, but all the risk is on the downside," Joe Rundle, head of trading at ETX Capital, said.

"Every day we tick on now people are going to get a bit more jumpy... I don't think there will be a full-on deal by the 31st of December... but I think if we're poles apart there's going to be a real issue (and the market) will come off really aggressively."

Automatic spending cuts and tax hikes are due to kick in, potentially damaging the U.S. economy, at the end of the year unless an agreement is reached to avoid them.

Rundle reckons the FTSEurofirst 300 could come off as much as 7 percent in the event of disappointment.

Aggreko topped the index's fallers' list, slumping more than 16 percent after it warned on the outlook for its business in a trading update, prompting Investec Securities to cut its rating on the stock to "hold" from "buy".

"Today's news will be seen as a something of a setback... That said, we continue to believe that there are many structural drivers that should continue to drive earnings in the years to come," Investec said in a note.

Telecoms group KPN slid 13 percent, leading falls seen across the sector, after the Dutch state raised much more than expected in its auction of fourth generation (4G) wireless frequencies, with prices so high KPN cut its dividend for this year and next to afford its licences.

Vodafone was another significant faller, off 2.3 percent.

Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Republic Day

Reuters Showcase

RK Laxman Dead

RK Laxman Dead

'Common Man' cartoonist RK Laxman dead at 93  Full Article 

Banking Revolution

Banking Revolution

India turns to corner shops, mobile phones for banking revolution.  Full Article 

Nuclear Group

Nuclear Group

China urges India to take steps to satisfy standards of NSG  Full Article 

Gold Market

Gold Market

Chinese gold demand holds up ahead of holiday, Indian buying weak  Full Article 

India-U.S. Relations

India-U.S. Relations

Column - U.S. and India should join to balance China's rise  Full Article 

Padma Bhushan

Padma Bhushan

India honours Bill Gates with civilian award  Full Article 

Fashionable Modi

Fashionable Modi

When Modi met Obama, his name was all over - his suit  Full Article 

Nuclear Deal

Nuclear Deal

Obama reveals nuclear breakthrough on landmark India trip  Full Article 

Australian Open

Australian Open

Venus fireworks illuminate Australia Day  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage