European shares knocked by U.S. weakness, mixed earnings

Reuters - UK Focus

* FTSEurofirst 300 down 1 percent

* Nokia (Stockholm: NOKI-SEK.ST - news) slides after sales miss

* U.S., China misses take sheen off of strong euro zone data

* Periphery outperforms, led by Portugal, Sabadell

By Alistair Smout

LONDON, Jan 23 (Reuters) - European shares fell on Thursday,pulled down by a double-digit fall in Nokia and weak U.S. andChinese data which fed pessimism about global growth prospectsand earnings.

Nokia dropped 10.7 percent after it reported asteep fall in sales at its network equipment division, whichwill be its core business once its sale of its phone businessgoes through.

It was joined at the bottom of the pan-European FTSEurofirst by British publisher Pearson (NYSE: PSO - news) , which dropped8.2 percent after warning in a trading update its 2013 earningsper share would be lower than expected.

While European earnings were generally mixed, with Spanishbank Banco de Sabadell SA among those that deliveredresults above expectations, U.S. stocks fell on weaker-than-expected manufacturing and jobs data and earnings from U.S.firms like MacDonalds, dragging Europe lower in theafternoon.

Chinese manufacturing data earlier had already depressed themining sector, which ended down 0.8 percent.

"With initial (U.S.) jobless claims rising slightly from theprevious week and Chinese flash manufacturing PMI contractingfor the first time in six months, investors will approach equitymarkets with increasing valuation concerns," Kash Kamal,research analyst at Sucden Financial, said.

That overshadowed news that Germany's private sector grew atits fastest pace in more than 2-1/2 years in January as factoryorders flooded in, and that French business activity shrank lesssharply than expected.

The FTSEurofirst 300 closed down 1.1 percent at1,332.63, although some analysts said that more strong domesticdata would support future gains.

"What is still very supportive is domestic macro momentum.This morning (we had) very strong PMIs in Europe, (and) as longas the macro is pointing up, the market's concerns aboutsignificant earnings downgrades to come will be easing,"JPMorgan analyst Emmanuel Cau said.

Despite the weak performance of European stocks in general,the European periphery outperformed, with Portuguese blue chips down just 0.1 percent after the government said it metthe target for its 2013 budget deficit.

Among the region's outperformers was Spain's Banco deSabadell, up 6.1 percent after it tripled profits to beatexpectations.

Today's European research round-up

Asset returns in 2013:

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