European Shares Slump

Published July 19, 2013

| Reuters

European shares slipped on Friday with specialist chemical storage group Vopak slumping after cutting its outlook, as opinions were divided on whether this month's equity rally was running out of steam.

The pan-European FTSEurofirst 300 index, which hit a 6-week high on Thursday, edged back 0.2 percent to 1,206.67 points in mid-session trading. The euro zone's blue-chip Euro STOXX 50 index fell 0.3 percent to 2,709.62 points.

Dutch group Vopak was the worst performer on the FTSEurofirst 300, falling 5.6 percent after its profit warning.

The FTSEurofirst 300, which is up around 6 percent since the start of 2013, hit a five-year high in late May of 1,258.09 points before falling to a 2013 low of 1,111.11 points in late June on concerns about a scaling back of U.S. monetary stimulus.

It has since recovered as investors expect any such tapering to be gradual, but Logic Investments' strategy head Peter Rice said he expected investors to book profits.

"We recovered a lot of ground from those June lows, but I would now expect us to retrace those gains in the near term," said Rice.

Others with a longer-term view kept a positive outlook, arguing that signs of a gradual recovery in the European economy would boost stock markets.

Credit Suisse upgraded its position on continental Europe to "benchmark", while strategists at Citigroup also favoured equities over bonds.

"I certainly believe we've got around 2 percent more upside left in this market by the end of this month, before we see any reversal," said JN Financial investment manager Edward Smyth.

Smyth added he would have 'long' positions betting on more gains on the Euro STOXX 50 up to the 2,768 point level.

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