By Blaise Robinson
PARIS, Feb 13 (Reuters) - European stocks ended flat on
Wednesday, pausing after the previous session's sharp rally as
weak telecoms and mining shares offset rises in auto stocks
which reported solid results.
Telefonica <TEF.MC> fell 1.8 percent, hit by worries over
the prospect of greater competition in Spain, while Vodafone
<VOD.L> lost 1.7 percent.
The FTSEurofirst 300 <> index of top European shares
closed unchanged, at 1,334.25 points. The index gained as much
as 0.6 percent in afternoon trading following
better-than-expected monthly U.S. retail sales.
"It is tempting to call the bottom of the market, but the
economic scenario is far from clear," said Arthur van Slooten,
strategist at Societe Generale, in Paris.
Data showed sales at U.S. retailers rose 0.3 percent in
January, an unexpected pickup that follows a 0.4 percent decline
in December, and was contrary to Wall Street analysts' forecasts
for a 0.2 percent decline.
"U.S. Jan retail sales headlines were marginally better than
expected, but I doubt this is going to change the broader view
that consumer spending is decelerating and that the consumer
remains very vulnerable to negative shocks going forward," Alan
Ruskin, chief international strategist at RBS Greenwich Capital,
wrote in a note.
Banks ended mixed, with Commerzbank <CBKG.DE> up 4.1 percent
and Banco Santander <SAN.MC> up 0.8 percent, while Royal Bank of
Scotland <RBS.L> fell 1.3 percent and Barclays <BARC.L> lost 0.4
percent.
Bradford & Bingley <BB.L> tumbled 23 percent after the
specialist mortgage lender took a larger-than-expected writedown
on its exposure to tarnished assets, while Alliance & Leicester
<ALLL.L> sank 7 percent on writedown fears.
LOVE AFFAIR OVER
The FTSEurofirst 300 index gained 3.4 percent on Tuesday,
after U.S. billionaire investor Warren Buffett offered to
reinsure municipal bonds held by top bond insurers, easing fears
that the crisis in the credit market could worsen.
But despite Tuesday's rally, Europe's benchmark index is
still down 11.4 percent in 2008 as concerns over the prospect of
a U.S. recession and fears of more writedowns in the banking
sector hammered stocks.
That compares with a 6 percent drop on the Dow Jones
industrial average <> and a 7.5 percent fall on the Standard
& Poor's 500 Index <.SPX>.
In a research report, Merrill Lynch said global investors'
appetite for European shares has diminished.
"Six months ago, close to a net 60 percent of global
investors were overweight Europe. Today this sits at only 7
percent. The love affair is over," Merrill Lynch analysts wrote.
"Investors flip-flop between expensive defensives and the
itch to buy beaten up cyclicals. This will carry on until they
can draw a line in the sand on the credit risk to banks and
financials."
Around Europe, Germany's DAX index <> gained 0.1
percent, UK's FTSE 100 index <> fell 0.5 percent and
France's CAC 40 <> rose 0.3 percent.
Auto shares rose, with Peugeot Citroen <PEUP.PA> gaining 4.7
percent after it reported solid 2007 results and said cost cuts
keeps the company on course for 2010 margin target.
Finnish tyre maker Nokian Renkaat <NRE1V.HE> surged 12
percent after posting stronger-than-expected results.
Dutch brewer Heineken <HEIN.AS> added 6 percent after upbeat
broker notes.
