BT warning, poor earnings weigh on European shares; Generali rallies

Reuters - UK Focus

* STOXX 600 ends up 0.2 pct

* BT dives after profit warning

* Aryzta (IOB: 0MFY.IL - news) , easyJet also drop after results

* Generali (EUREX: 566030.EX - news) jumps on takeover speculation (Adds details, closing prices)

By Kit Rees

LONDON, Jan 24 (Reuters) - Europe's earnings season got off to a rocky start on Tuesday with profit warnings from BT Group (Other OTC: BTGOF - news) and Aryzta sending their shares sharply lower.

The pan-European STOXX 600 index still managed to eke out a 0.2 percent gain, though, propped up by Italian financials and mining stocks.

While basic resources was the biggest sectoral riser, boosted by a weaker dollar, Italian insurer Generali was the biggest individual gainer, jumping 8.2 percent on talk Intesa Sanpaolo (Amsterdam: IO6.AS - news) could make a bid for it.

Sources close to the matter said Intesa was considering a bid for Generali and that its two main foundation shareholders backed the move even if it could temporarily reduce dividends for the bank's current investors.

Italy's index was the standout performer, up 0.9 percent as Generali's biggest shareholder Mediobanca (Milan: MB.MI - news) also rallied 5.6 percent. Intesa's chairman, Gian Maria Gros-Pietro, said the bank would not discuss Generali at a board meeting due on Friday but would focus on budget issues.

Intesa shares fell 4.4 percent.

BT lost a fifth of its market value, hit by an Italian accounting scandal that has compounded a sudden slowdown in its British government work and forced the telecoms group to cut forecasts for the next two years. Shares (Berlin: DI6.BE - news) in the company tumbled by 20.8 percent to 303 pence, their biggest ever one-day fall.

"I think companies have been punished ... over the last year for misleading statements, for false accounting," Jonathan Roy, advisory investment manager at Charles Hanover Investments, said. "The worries are, is there anything else that isn't being managed as it should be?"

Swiss bakery firm Aryzta was the biggest faller, sliding 31.9 percent after issuing a profit warning.

Budget airline easyJet was another top faller, down 8.8 percent after reporting its first-quarter earnings.

"While Q1 could be viewed as a positive start to the year we expect the fuel/currency impact (which is beyond the company's control) will weigh into the shares negatively (especially given the recent strong performance)," analysts at UBS (LSE: 0QNR.L - news) said in a note.

A miss in fourth quarter earnings also weighed on Philips (Amsterdam: PHIA.AS - news) , which dropped 1.8 percent. The medical equipment maker also disclosed a conflict with the U.S. government over defibrillators it sold in 2015 and before. (Additional reporting by Danilo Masoni; Editing by Raissa Kasolowsky and Susan Fenton)