LONDON (Reuters) - European shares remained stuck at seven-week lows on Tuesday as a fall among commodities-related sectors and telecoms firm Altice (ATCA.AS) outweighed a buoyant tech sector.
The pan-European STOXX 600 erased earlier gains to end the session 0.6 percent lower. This was the sixth day of straight losses for the benchmark.
“Markets have moved quite a long way and a pause is probably warranted, but we don’t think it’s a big turning point,” said Ronan Carr, European equity strategist at Bank of America Merrill-Lynch (BAML).
“Underlying fundamentals are still pretty constructive in terms of global growth, and we would be a buyer of any material dip in markets,” he added.
While materials stocks .SXPP and oil firms .SXEP were the biggest sectoral fallers due to a pullback in oil and copper prices, the biggest individual faller was Altice (ATCA.AS).
Altice plummeted more than 13 percent after Morgan Stanley cut its price target on the stock by 34 percent, adding to pressure on the shares which are already down 46 percent this year.
Stocks have had violent reactions to results this quarter, Goldman Sachs strategists said. Earnings-day price moves have been more than 3.5 times the average daily move – the most extreme results reactions the bank had data for.
“The companies that are missing … are then getting clobbered 10 percent, probably because the markets were too optimistic of where we were economically,” Neil Dwane, global strategist at AllianzGI, said.
“There’s been probably more disappointments than we would expect with European economic growth trundling along in good fashion.”
However, results from tech companies gave investors something to smile about. Software maker Simcorp (SIM.CO) jumped 10 percent after earnings beat forecasts, while internet services provider United Internet (UTDI.DE) gained 3.5 percent after its acquisition of mobile firm Drillisch (DRIG.DE) boosted its profits.
Peer Scout24 (G24n.DE) also jumped 6.1 percent.
Chipmaker Infineon (IFXGn.DE) gained 2.7 percent despite reporting weaker dollar-dented sales.
“While slightly disappointing, we continue to expect Infineon’s margins to resume their upward trajectory,” wrote Liberum analysts, saying the main headwind to sales and profitability was the stronger euro.
“Underlying growth trends in the tech sector are quite strong,” said BAML’s Carr. “Tech sector revisions momentum has not definitively bottomed out but it looks like it’s finding a floor, much like the broader market.”
As the earnings season nears its end, MSCI euro zone companies are tracking 9.9 percent year-on-year earnings growth in U.S. dollar terms, and 62 percent of companies in the euro zone index have beaten or met earnings estimates.
Analysts have revised down earnings estimates for the broader MSCI Europe, but downgrades seem to have stabilized as the results season developed.
Reporting by Helen Reid and Kit Rees; Editing by Janet Lawrence