* FTSEurofirst 300 index declines 0.1 percent
* Moody's downgrade of Ireland dampens sentiment
* For up-to-the-minute market news, click on []
By Atul Prakash
LONDON, April 15 (Reuters) - European equities drifted lower
on Friday as worries about the euro zone debt crisis resurfaced
after Moody's cut Ireland's rating, while a jump in inflation
raised concerns of more monetary tightening in China.
At 0909 GMT, the FTSEurofirst 300 <> index of top
European shares was 0.1 percent lower at 1,128.26 points after
hitting a two-week low in the previous session.
Banks featured among the top decliners, with the sector
index <.SX7P> down 0.8 percent, Bankinter <BKT.MC> falling 1.8
percent and Bank of Ireland <BKIR.I> down 0.7 percent. Miners
also lost ground on concerns further monetary tightening in
China could hurt demand for raw materials.
"The fact that Moody's downgraded Ireland is certainly not
helpful for sentiment. It once again shows that the troubles
facing the euro zone are not completely behind us and may
resurface at any given point," said Philippe Gijsels, head of
research at BNP Paribas Fortis Global Markets.
"Sell in May and go away may not be such a bad idea. Over
the next couple of months we will be probably looking at a
weaker and more nervous market."
Moody's cut Ireland's sovereign rating by two notches and
kept its outlook on negative, a day after fellow ratings agency
Fitch upgraded its outlook for the country. In Greece, the
government will present fresh austerity plans to convince
markets it can avoid restructuring its debt. []
"These downgrades can periodically spook the market.
These countries -- Greece, Ireland and Portugal -- are in a
special situation and what is key now is that they prove to the
market that they have the will to consolidate successfully,"
said Klaus Wiener, chief economist at Generali Investments,
which manages $465 billion.
"There is a tug of war between macro fundamentals, which are
still fairly positive, and risk factors like oil prices, the
situation in Japan and a turn in monetary and fiscal policies.
As long as macro fundamentals stay solid, we have a volatile
market with a positive drift."
Across Europe, France's CAC 40 <> fell 0.2 percent,
Spain's IBEX <> dropped 0.4 percent and Portugal's PSI 20
<> fell 0.2 percent. Ireland's ISEQ <.ISEQ> was up 0.5
percent after recent losses, helped by a jump in media shares.
EARNINGS SEASON
Analysts said the earnings season's start was good, but not
great. Alcoa <AA.N> disappointed the market, while Google
<GOOG.O> beat on revenues, but missed slightly on earnings due
to higher costs. JPMorgan <JPM.N> beat handsomely on earnings,
but the stock has been down since it reported results.
"When the market is talking, we should all pay attention and
listen. When stocks no longer go up on good news, the good news
has already been discounted and the market looks tired," Gijsels
said.
But Goldman Sachs maintained its "overweight" stance in
equities on both a 3-month and a 12-month horizon, on hopes of
strong economic growth combined with low interest rates, high
earnings growth, and attractive valuations.
"This makes equities look attractive compared with other
asset classes. Yet, in the near term, we believe the risks are
higher than in January."
Chemicals shares topped the gainers' list, with the sector
index <.SX4P> up 0.8 percent. The world's top agrochemicals
company Syngenta <SYNN.VX> rose 1.7 percent after executives at
the group said it is eyeing more growth as spiralling commodity
prices bolster demand for its products.
Nestle <NESN.VX>, the world's largest food group, rose 0.9
percent and volumes were 210 percent of its 90-day daily average
in the first two hours of trading as the company said strong
emerging market growth and price rises helped to drive better
than expected first-quarter underlying sales growth.
(Editing by Mike Nesbit)
