European stocks hit by Philips profit warning

European stocks were a lower in morning trade on Wednesday after Dutch electronics manufacturer Philips issued a profit warning.
Philips shares slumped 11.5 per cent to €15.92 after the company warned of a “low single-digit” sales decline in the second quarter at it’s consumer lifestyle division. The company said it would announce cost cuts in the coming weeks.
Swedish rival Electrolux fell 2.3 per cent to SKr149.50 in response. This came in spite of news that the finance chief of its Egyptian takeover target Olympic Group expected the deal to be completed within a month.
The FTSE Eurofirst 300 index eased 0.5 per cent to 1,090.78, as the warning overshadowed any positives coming from Greece after the country’s government won a confidence vote and vowed to push ahead with austerity measures to insure the country’s bail out loan.
Stocks in Europe surged on Monday as investors priced in the result of the vote of confidence, analysts said, but the sterner test of pushing the €28bn austerity plan through parliament comes next week. Ahead of this, investors again turned cautious.
“The vote next week on the austerity measures and the fact that some just see this as delaying the inevitable fact that the eurozone is broken beyond repair, equities may well struggle to progress any further in the near term,” said Cameron Peacock at IG Markets.
On the upside, Tele2, the Nordic telecoms operator, which also has large operations in Russia and other emerging markets, climbed 2.6 per cent to SKr122.30 after its rating at domestic broker SEB was raised to “buy” from “hold”.
Credit Suisse was also upbeat on Nordic telecoms, upgrading TeliaSonera to “neutral” from “underperform” and lifting Telenor’s target price 5 per cent to NKr110, citing the potential for mobile industry consolidation in the region.
Shares in Telenor climbed 0.5 per cent, but TeliaSonera dipped 0.8 per cent to SKr45.89.
Meanwhile, Finnish paper manufacturer UPM-Kymmene rose 2.5 per cent to €12.53 after Credit Suisse raised its rating to “outperform” from “neutral”.
“An approval and successful integration of UPM’s agreed acquisition of Myllykoski is the key for UPM to further differentiate its cost base and improve returns in absolute and relative terms,” said analyst Lars Kjellberg.

Source: http://www.ft.com
Neeraj Rajgarhia
Summer Intern - Technical Analyst
DENIP Consultants Pvt. Ltd.