• Vodafone slips on downbeat cash flow forecast
  • Embracer slides after weak EBIT forecast
  • EZ Q1 GDP flash reading due later

May 16 (Reuters) – European shares were largely steady on Tuesday with technology stocks offsetting declines in automakers, while investors awaited more data on the euro zone economy to gauge how far the European Central Bank will keep hiking interest rates.

The pan-European STOXX 600 index (.STOXX) was flat after opening marginally lower.

Technology stocks (.SX8P) rose 0.7%, tracking overnight gains in Wall Street peers. Automakers (.SXAP) slid 0.7% after weak data from China fuelled concerns about an economic slowdown.

Nerves about the U.S. debt ceiling standoff as well as a hawkish rhetoric by ECB policymakers have weighed on investor sentiment in the recent weeks, overshadowing an upbeat earnings season.

“The economic risk created by the tightness of the ECB’s policy suggests investors should protect themselves,” analysts at BCA Research said in a note.

“German factory orders have an excellent track record when it comes to explaining the fluctuations of European equities. Currently, the collapse in total orders all point toward weaker European earnings and thus, weaker European equities as well.”

Investors are awaiting a flash estimate of euro zone GDP for the first quarter and Germany’s ZEW economic sentiment survey for May later in the day.

The telecoms index (.SXKP) declined 0.4% with Telecom Italia (TLIT.MI) falling 2.4% after a report said Italy’s state lender plans to drop its 19.3 billion euros ($21 billion) offer for the company’s landline network.

In the UK, Vodafone Group Plc (VOD.L) slid 3.7% after its new boss Margherita Della Valle said she would cut 11,000 jobs over three years to simplify the telecoms group and warned of a 1.5 billion euro decline in free cash flow this year.

Embracer Group (EMBRACb.ST) tumbled 14.9% to the bottom of the STOXX 600 after the Swedish game developer lowered its full-year adjusted EBIT forecast.

Sonova Holding AG (SOON.S) dropped 9.9% after the Swiss hearing aid maker reported full-year core profit below market expectations, citing initial dilution from recent acquisitions and input cost challenges.

Autoparts maker Faurecia (EPED.PA) climbed 4.5% after Goldman Sachs started coverage with a “buy” rating.

Reporting by Sruthi Shankar in Bengaluru; Editing by Dhanya Ann Thoppil

Our Standards: The Thomson Reuters Trust Principles.


By admin