FRANKFURT, April 8 (Reuters) - European shares fell 1
percent on Tuesday morning as technology stocks tumbled after
U.S. microprocessor maker AMD <AMD.N> said first-quarter sales
had fallen below its expectations.
Dutch navigation device maker TomTom <TOM2.AS> fell 11.5
percent after it cut its 2008 revenue outlook due to lower
prices for its personal navigation devices in the first quarter.
By 0925 GMT, the pan-European FTSEurofirst 300 index
<> was down 1.1 percent at 1,314.92 points, after gaining
about 1.3 percent in the past two sessions on growing optimism
that the worst of the credit crisis was over.
Worries about corporate performance gained momentum
overnight as U.S. aluminium producer Alcoa <AA.N> said its
first-quarter profit halved from a year ago because of energy
costs and the weak dollar.
Comments from Advanced Micro Devices <AMD.N>, the
second-largest maker of computer processors, that it would cut
10 percent of its workforce after first-quarter sales fell more
than it had expected, weighed on European technology stocks.
The DJ Stoxx index of European technology shares <.SX8P>
fell 2.5 percent, with Dutch chip equipment maker ASML <ASML.AS>
falling 5.6 percent, British chip designer ARM <ARM.L> down 3.7
percent, Franco-Italian chipmaker STMicroelectronics <STM.PA>
down 2.7 percent and Infineon <IFXGn.DE> down 5.9 percent.
"This earnings season's first updates have caused
repercussions," said Klaus Stabl, chief economist at broker ICF
in Frankfurt, referring to Alcoa and AMD.
Nonetheless, Stabl said he still expected the current upward
trend to continue. "The market is recovering," he said.
The FTSEurofirst 300 index <> has gained about 10
percent since mid March.
"The economic situation in Europe is still stable. Stocks
have lost disproportionately in the first quarter. The remaining
risk is manageable. I don't think it'll swing back massively
again," he added.
Banking shares have lost almost 13 percent since the
beginning of the year, and the DJ Stoxx Banks index <.SX7P> has
underperformed the FTSEurofirst 300 index <> by almost 2
percent.
The sector index fell 1.5 percent on Tuesday, wiping out its
1.3 percent gain from the previous session, after BNP Paribas
<BNPP.PA> CEO Baudouin Prot said worsening market volatility
would make the company's promise of matching last year's
investment banking revenues difficult.
BNP shares fell 1.4 percent, Royal Bank of Scotland <RBS.L>
fell 2.8 percent, and Barclays <BARC.L> dropped 3.1 percent.
The DJ Stoxx basic resources index <.SXPP> fell 2.3 percent,
with Rio Tinto <RIO.L> dropping 1.8 percent after it said it was
still dismissive of the $135 billion all-stock hostile takeover
bid by BHP Billiton <BLT.L>. BHP shares fell 1.7 percent.
Around Europe, the UK's FTSE 100 index <> fell 0.8
percent, Germany's DAX index <> dropped 1.1 percent, and
France's CAC 40 <> eased 1 percent.
The main focus on Tuesday will be U.S. pending home sales
data for February at 1400 GMT and the release of the minutes of
the U.S. Federal Reserve's March 18 meeting, due at 1800 GMT.
(Reporting by Eva Kuehnen, editing by Will Waterman)
