Periphery lags as European shares post small gains ahead of Fed
* FTSEurofirst 300 up 0.2 pct * BBVA leads euro zone bank selloff after result miss * Traders say investors more cautious after AQR * Fugro tumbles 26 pct after cancelling payout By Francesco Canepa LONDON, Oct 29 (Reuters) - Southern European shares lagged small gains in pan-European indexes on Wednesday as weak results from heavyweight bank BBVA offset optimism ahead of a Federal Reserve's policy announcement. Spanish bank BBVA fell 4.1 percent as it reported a lower-than-expected net profit for the first nine months of the year and the pace of an ongoing turnaround at the lender disappointed analysts and investors. The stock was the biggest drag on Euro STOXX banking index , which fell 3.1 percent and took its fall since the publication of the European Central Bank's stress tests over the weekend to 4 percent. Investors had generally been expecting the health checks' publication to restore confidence in some of the weaker lenders and trigger a rally. But traders said these bullish bets had been unraveling as the tests highlighted capital holes at some Italian banks, as well as extra non-performing loans and hidden losses. "There were lots of positions held in 'weak' financials, as the ECB's AQR test results were seen as a trigger for the next uptick," a trader said. "They were all stopped out." Shares in Banca Monte dei Paschi di Siena, which faces a 2.1 billion euro capital shortfall after the stress test, fell 8.2 percent after trading in the stock was repeatedly halted. A Thomson Reuters index of Italian banks fell 4.4 percent. Fiat Chrysler Automobiles (FCA) outperformed a lacklustre Milan bourse, surging 12.8 percent as it unveiled plans to list a 10 percent stake in luxury brand Ferrari and issue $2.5 billion in convertible bonds to help fund the parent company's turnaround plan. The broader FTSEurofirst 300 index of top European shares closed up 0.2 percent at 1,319.34 points, rising for the fourth of the last seven sessions, albeit in declining volume. Trading volume on the index was nearly 10 percent lower than its average for the past month. Global shares have rebounded during that time after a sharp pullback, as investors took heart from generally strong corporate earnings, especially in the United States, and the prospect of an accommodative stance from Federal Reserve. The market expects the Fed's Federal Open Market Committee to announce it will end years of stimulus measures this month but also send a soothing message by signaling interest rates are not likely to rise soon. "The volumes into the rally are waning," Monument Securities head of sales, Andy Ash, said. "As we approach the FOMC meeting and the month end, we have catalysts to pivot once again." RESULTS MIXED Dutch marine services group Fugro sank 26.6 percent after it warned it would not pay a dividend for 2014 due to deteriorating markets and price pressure on oil and gas projects. The dividend cut, which came hard on the heels of a profit warning from Italian oil industry services group Saipem on Tuesday, sent shares in sector peer CGG down 3.4 percent. Providing some support to the battered energy sector, investors welcomed oil major Total's decision to maintain its dividend while pressing ahead with cost cuts after falling oil prices squeezed its third-quarter profits. The shares rose 2 percent. Europe's largest semiconductor company STMicroelectronics shed 10 percent after posting higher-than-expected quarterly net profit but saying margins would be flat and revenue would fall in the final quarter due to a softening market. About a third of companies listed on the STOXX Europe 600 benchmark index have reported results so far in the earnings season, with 67 percent of them meeting or beating profit forecasts, and 59 percent meeting or beating revenue forecasts, according to Thomson Reuters Starmine data. Europe bourses in 2014: link.reuters.com/pap87v Asset performance in 2014: link.reuters.com/gap87v Today's European research round-up (Additional reporting by Blaise Robinson in Paris and Vikram Subheadar in London; Editing by Tom Heneghan)
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