European shares dip on earnings worries

Last Updated: Mon, Oct 22, 2012 08:40 hrs

* FTSEurofirst 300 down 0.1 pct, Euro STOXX 50 down 0.1 pct

* Rajoy's victory in Galicia fuels Spanish bailout hopes

* Bearish double-tops taking shape on charts -Aurel BGC

By Blaise Robinson

PARIS, Oct 22 (Reuters) - European stocks dipped on Monday and a key index fell further from a one-month high hit last week, as investors worried about corporate profits after a string of disappointing results.

But losses were limited by renewed hopes that debt-stricken Spain will soon request a bailout after Prime Minister Mariano Rajoy clinched election victory in his home region of Galicia on Sunday in a result seen as supportive for his austerity drive.

According to European officials and analysts, Rajoy had wanted to wait until the regional elections before requesting a bailout, which would trigger the European Central Bank's bond-buying programme aimed at lowering the country's high borrowing costs.

"This bailout is what the market is waiting for before reviving the summer rally," a Paris-based trader said.

"The systemic risks have receded a lot, investors are scooping up banking shares and buying all the market's dips. Europe needs to rescue Spain and stop contagion once and for all; then this crisis should be over."

Most euro zone banks gained ground on Monday, with Credit Agricole up 0.9 percent, UniCredit up 1 percent and Bankia up 5.5 percent.

At 0811 GMT, the FTSEurofirst 300 index of top European shares was down 0.1 percent at 1,110.78 points.

The index last week surged to just a few points below a 14-month high hit in mid-September, before dropping 0.8 percent on Friday, hurt by weak corporate earnings from U.S. bellwethers such as General Electric.

The global conglomerate posted weaker-than-expected quarterly revenue and set a cautious tone for next year, warning that it expects the tough economic environment to continue.

The euro zone's blue chip Euro STOXX 50 index was down 0.1 percent at 2,539.88 points, further retreating from a four-week high hit last Thursday.

"We're now seeing double tops around the resistance levels. We're very cautious because the risk is that people lose patience as the indexes fail to break above the resistances and the consolidation becomes a correction," Aurel BGC chartist Gerard Sagnier said.

Around Europe, UK's FTSE 100 index was down 0.2 percent, Germany's DAX index fell 0.2 percent, and France's CAC 40 slipped 0.2 percent.

Philips Electronics featured among the top gainers after the firm posted forecast-beating results and said it is on a "good trajectory" to meet its 2013 targets.

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