Europe stocks suffer worst day in 4 weeks after GE

By Blaise Robinson

PARIS, April 11 (Reuters) - European stocks ended down 1.4 percent on Friday, their biggest one-day drop since mid-March as a profit warning by General Electric (GE.N: Quote, Profile, Research) rattled investors and cemented the view that the U.S. economy was tipping into recession.

Industrial stocks took a beating, with Siemens (SIEGn.DE: Quote, Profile, Research) losing 3.4 percent, and Rolls-Royce (RR.L: Quote, Profile, Research) falling 3.2 percent. The FTSEurofirst 300 index of top European shares ended down 1.4 percent, at 1,284.71 points, its lowest close since March 31 and its fourth negative session in a row.

The index ended the week with a loss of 2.6 percent. "GE's results confirm our view that the consensus is still way too high for 2008 and that forecast downgrades will continue, and dampen the market's recent enthusiasm," said Romain Boscher, head of equity management at Groupama Asset Management, in Paris.

GE, viewed as an economic bellwether because of its range of businesses, posted an unexpected 6 percent drop in quarterly profit and cut its full-year profit forecast from continuing earnings, quashing European shares' early recovery from a three-day drop.

"These results confirm that the slowdown is widespread and beginning to impact capex (capital expenditures) and longer-cycle businesses," said Stephen Surpless, senior analyst at Cantor Fitzgerald in London.

"While the credit crisis might be nearer to the end than the beginning, according to some, the impact on the real economy is taking place and is unlikely to abate in 2008," he added.

UK telecoms group Vodafone (VOD.L: Quote, Profile, Research) was the biggest laggard among Europe's blue chips, down 4.3 percent. Morgan Stanley analysts said the stock did not appeal to them compared with KPN (KPN.AS: Quote, Profile, Research), TeliaSonera (TLSN.ST: Quote, Profile, Research) or France Telecom (FTE.PA: Quote, Profile, Research) after meeting EU officials on routing costs.

Other telecoms retreated, with Telefonica (TEF.MC: Quote, Profile, Research) down 2.8 percent, and Deutsche Telekom (DTEGn.DE: Quote, Profile, Research) down 1.8 percent.