* FTSEurofirst down 1.1 percent
* LSE, ICAP fall as business takes hit on volumes
* Sodexo fall as Barclay cuts rating on earnings risk
By David Brett
LONDON, Sept 26 (Reuters) - European shares fell on
Wednesday as positivity around recent central bank stimulus
continued to fade in the face of concerns about growth and
By 0742 GMT, the FTSEurofirst 300 had shed 12.37
points, or 1.1 percent, to 1,107.42, having risen 0.4 percent on
Tuesday, buoyed late on by bullish macro economic data on Wall
Street. That sentiment had soured by the U.S. close, however.
Traders cited weak corporate results, quarter-end profit
taking and doubts over the effectiveness of the Fed's latest
monetary stimulus as the S&P 500 suffered its worst day
since June on Tuesday.
"If you are in the QE [quantitative easing] camp and were
hoping for a sweet ride until the end of the year then this has
been disappointing," Steen Jakobsen, strategist at Saxo Bank,
"We are in the 'blow off' phase. Many stocks are still great
stocks but they are overvalued relative to the incoming economic
situation," he said.
The FTSEurofirst has traded in a tight 20 point range since
the United States announced further stimulus measures in early
September as the index paused after nearly 18 percent gains
since early June.
The rally was accompanied by low volumes, a result of the
overall cautious sentiment among investors.
That was reflected by the London Stock Exchange and
broker ICAP on Wednesday, after both reported big falls
in trading over the summer, leaving them reliant on other
sources of revenue to sustain profits.
LSE shed 2.1 percent, while ICAP fell 4.8 percent.
Other financial toiled too. Banks, which helped
power gains over the European summer, enjoyed rerating to 10.8
times forward 12-month price-to-earnings, near post credit
crisis highs, as weak second-quarter earnings combined with
strong share gains.
Miners experienced a similar revival in valuations
under similar circumstances, leaving investors pining for a
recovery in earnings following fresh stimulus in Europe and the
"The aggressive liquidity injections announced by the ECB
and the Fed have created a buy signal for risky assets,"
Barclays said in a note, retaining a bullish longer-term
"While we do not foresee a booming recovery any time soon,
we do expect the recent deceleration in global growth to
stabilize over the next few months, and that should be
sufficient to spark further gains in risky asset prices," it
Earnings risks saw French catering-to-vouchers group Sodexo
fall 4 percent as Barclays cut its rating on the
company to "underweight" from "equalweight" saying full year
results on Nov. 8 will be the trigger for consensus earnings
Concerns Apple Inc was struggling to keep up with
demand for its new iPhone saw ARM, whose chip designs
are used in the U.S. firm's smartphones, shed 2.4 percent.
Elsewhere, RSA Insurance dipped 3.4 percent after
the company traded without a dividend.
There main risers were defensive stocks - companies and
sectors whose products and services are perceived to remain in
demand whatever the economic backdrop - which endured a relative
period of underperformance while the broader market rallied in
the three months since June.
UK utility SSE added 0.1 percent, while drug firm
Novartis added 0.3 percent