By Natsuko Waki
LONDON, Feb 7 (Reuters) - European and Asian shares fell
while the yen ticked higher on Thursday after warnings from
major technology firms added to concerns that a slowing U.S.
economy might hurt corporate earnings globally.
Tech shares suffered in particular after network equipment
maker Cisco Systems <CSCO.O> late on Wednesday forecast
disappointing third-quarter revenue growth, citing economic
concerns. German chipmaker Infineon <IFXGn.DE> also warned of
further losses at its phone chips unit.
The six-month-old credit crunch, stemming from mass defaults
on U.S. subprime mortgages, has hit corporate profits and
threatens to kick the world's largest economy into recession.
Monetary policy decisions from Britain and the euro zone
also prompted investors to cut back on risky positions. The Bank
of England is expected to cut interest rates, while investors
are eyeing any hints from the European Central Bank that it
might ease policy later in the year.
"It is reporting season that is dominating today ... Cisco
gave negative comments reporting their forecast so there is a
negative mood spreading to the tech area in Europe," said Achim
Matzke, European stock indexes analyst at Commerzbank in
Frankfurt.
The FTSEurofirst 300 index <> was down half a percent
on the day, while MSCI main world equity index <.MIWD00000PUS>
dropped a quarter percent to hit 1-1/2 week lows.
The MSCI index is down nearly 16 percent from all-time highs
in November.
The iTraxx Crossover index <ITCRS5EA=GFI>, a key indicator
for European credit market sentiment, widened to 519 basis
points -- close to record levels set in late January.
ECB LANGUAGE
Cross market volatility pushed investment bank UBS's Risk
Index higher to indicate increasing risk aversion, which tends
to benefit low-yielding currencies such as the yen.
The yen rose around 0.15 percent to 155.90 per euro
<EURJPY=> although it was relatively steady elsewhere <JPY=>.
The euro was also steady at $1.4619 <EUR=> before the policy
decision by the ECB.
The central bank is set to leave rates on hold at 4 percent
in the face of above-target inflation and strong wage growth.
"Our focus will be on whether (ECB President Jean-Claude)
Trichet concedes that the outlook for slower global growth will
reduce upside CPI risks and/or if he states that the Council
considered all options, including an easing, which would shift
the bias toward neutral," Calyon said in a note to clients.
"The latter in particular would hint at a rate cut before
the June move ... and prompt a sell off in euro/dollar."
In safe-haven bond markets, the March Bund future <FGBLH8>
was up 10 ticks.
Platinum raced to set fresh record highs again as supply
problems in South Africa attracted strong demand from investors.
Platinum <XPT=> rose as high as $1,833.00 an ounce, gaining more
than 20 percent since the start of the year. Gold <XAU=> was
slightly higher at $904.10.
U.S. light crude <CLc1> extended losses, falling to $87.09 a
barrel as concerns about the U.S. economy and data showing
higher weekly U.S. crude and fuel stocks.
(Editing by Mike Peacock)
