* FTSEurofirst 300 index sheds 1.4 pct
* Vodafone, Ericsson weigh on telecoms and techs
* American Express hits banks
By Patrizia Kokot
LONDON, July 22 (Reuters) - European shares fell on Tuesday,
led by Vodafone <VOD.L>, which sank after issuing a weak
outlook, while banks were weighed down by disappointing earnings
from American Express <AXP.N>.
By 0826 GMT, the FTSEurofirst 300 index <> of top
European shares was down 1.4 percent to 1,153.72 points.
Telecoms and technology stocks took a hit after both
Vodafone and Ericsson <ERICb.ST> disappointed investors.
Vodafone shed 15.6 percent after the world's largest mobile
phone company by sales released in-line figures for the
first-quarter but spooked investors by saying it expected
full-year revenue to be around the bottom of its previously
stated range due to economic weakness.
Peers Deutsche Telekom <DTEGn.DE>, Telefonica <TEF.MC> and
KPN <KPN.SA> all fell between 4.6 and 7 percent.
Ericsson slumped 9 percent as it beat expectations with its
second-quarter report, but also unveiled hefty restructuring
charges and according to analysts disappointed in terms of
profitability.
Peer Nokia <NOK1.V.HE> lost 2.4 percent, while chip makers
Alcatel-Lucent <ALUA.PA> and ASML <ASML.AS> and
STMicroelectronics <STM.PA> fell between 2 and 3.8 percent.
AMERICAN EXPRESS HITS BANKS
Among sectors, banks were the biggest drag on the index.
The DJ Stoxx European banks <.SX7P> fell 3 percent with
Deutsche Bank <DBKGn.DE>, Credit Suisse <CSGN.VX> and HBOS
<HBOS.L> all down between 1.8 and 2.6 percent.
Belgian-French financial services group Dexia <DEXI.BR>
<DEXI.PA> fell 9 percent after Moody's Investors Service said it
might cut its top rating for Dexia's insurance division.
U.S. credit card issuer American Express overnight released
a steeper-than-expected 38 percent drop in quarterly profit as
it set aside more money to cover credit losses.
"I just think good news doesn't appear to make the front
pages at the moment," Mic Mills, a risk trader at TradIndex
said.
Auto stocks also underperformed following a bearish note
from Morgan Stanley, which downgraded supplier Michelin
<MICP.PA> to "underweight" from "overweight".
In a note to clients, the broker says European automotive
stocks have some "40 percent downside to trough on price/sales,"
and advised investors to avoid stocks "where share prices are
temporarily elevated by M&A", pointing to VW <VOWG.DE>,
Continental <CONG.DE> and Porsche <PSHG_p.DE>.
Continental bucked the negative trend, adding 0.4 percent
after Schaeffler raised its takeover offer for the group to
70.12 euros from 69.37 euros per share.
SLICK OILS, SUEZ SURGE
Oil stocks were in demand as crude climbed back above $131 a
barrel in morning trade. Total <TOTF.PA>, Shell <RDSa.L> and BP
<BP.L> all advanced between 1.7-2.2 percent.
"Everyone is looking at hurricane Dolly, which may create a
bit of havoc," Mills added.
In utilities, newly merged entity GDF Suez <GSZ.PA> started
trading in Paris, falling 3 percent.
Suez Environnement <SEVI.PA>, the water and waste company
spun off by Suez as part of the GDF merger, surged almost 40
percent on its debut. Veolia Environnement <VIE.PA> tracked its
peer higher, adding 6.6 percent.
TomTom <TOM2.AS> soared 12 percent after the navigation
device maker beat analyst expectations with its quarterly sales
and operating profit.
The news prompted Societe Generale to raise its stance on
the stock to "hold" from "sell", while Rabobank upped its
recommendation to "buy" from "hold".
UBS, which has a "buy" stance on TomTom, highlighted its
earnings per share of 0.42 euros, well above the 0.27 euros seen
by the broker.
(Editing by Quentin Bryar)
