European shares halt winning on poor earnings?

European stocks snapped a week-long winning streak on Thursday, weighed down by a batch of disappointing updates from blue-chip companies, while Italian shares lagged peers on the threat of a new political crisis.

Reuters reported that shares in Swiss food group, Nestle, fell two per cent after it said it may undershoot its long-term growth targets again this year due to weaker demand from emerging markets and price pressures in Europe.

French spirits group, Pernod Ricard, also warned about weak demand in China on Thursday as it cut its annual profit growth goal. After a sharp drop in early trade, shares in the group rebounded, with analysts at Liberum saying long-term investors could find an attractive entry point at the current price.

An MSCI basket of stocks with the highest proportion of sales from emerging countries has fallen by more than two per cent this year, underperforming the broader market, as signs of a slowdown in China and capital flight from other emerging countries saw traders ditch assets linked to those regions.

“Our view is that there will be some further disappointment from companies exposed to emerging markets in the fourth quarter (2013). Difficult to assess, however, what is now included in share prices as this thematic is very well known,” said Yann Belvisi, a strategist at CM-CIC Securities in Paris.

“Consensus is becoming very bearish on these stocks but we don’t expect (emerging market) economies to bottom too low, so opportunities should materialise later in the year.”

The pan-European FTSEurofirst 300 index was down 0.9 per cent at 1,314.94 points at 1336 GMT, falling for the first time in seven sessions. The Euro STOXX 50 index was down 1 per cent at 3,063.81.