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European shares slip ahead of Bernanke policy hint

Published 10/15/2010, 08:07 AM
Updated 10/15/2010, 08:12 AM

* FTSEurofirst 300 index falls 0.2 percent

* Old Mutual slides as HSBC pulls out of Nedbank talks

* Techs gain on Advanced Micro Devices, Google results

By Joanne Frearson

LONDON, Oct 15 (Reuters) - European shares fell on Friday before a speech by the U.S. Federal Reserve head which could give clues on the Fed's next policy steps, while retailers slipped after Carrefour trimmed its profit forecast.

However, losses were limited as technology stocks Infineon and ASML both rose 1.2 percent following strong quarterly results from U.S. chipmaker Advanced Micro Devices and the Internet search giant Google.

By 1136 GMT, the pan-European FTSEurofirst 300 index of top shares was down 0.2 percent at 1,082.95 points.

U.S. Federal Reserve Chairman Ben Bernanke is due to talk at 8:15 a.m. (1215 GMT) at a Fed conference in Boston.

"The markets are waiting for Bernanke. They want to hear when the quantitative easing (QE) will begin and how much there will be: if they don't they'll be disappointed," Giuseppe-Guido Amato, strategist at Lang & Schwarz in Frankfurt, said.

Financial markets widely expect the U.S. central bank to begin a new programme of buying longer-term U.S. Treasury securities at its Nov. 2-3 meeting and will look for more details on the scope.

Retailers weighed on the market, with the STOXX Europe 600 Retail down 0.8 percent.

Europe's biggest retailer Carrefour fell 4 percent after it trimmed its 2010 profit forecast due to weak sales in French hypermarkets and pointed to problems in Brazil, raising concerns over the execution of its turnaround plan.

French drinks group Pernod-Ricard slid 2.2 percent after Credit Suisse cut to "underperform" from "neutral".

Elsewhere, the insurance sector featured among the worst performers. Old Mutual was 6.1 percent lower after HSBC dropped out of an $8 billion bid for South Africa's Nedbank, which is majority owned by Old Mutual.

BRIGHTER PICTURE AT ITV

On the upside, ITV gained 3.6 percent after Morgan Stanley upgraded the broadcaster to "overweight" and raised its price target, saying the climate for advertising is becoming more benign.

Technical charts indicated a bullish trend for equities, with the Euro STOXX 50 staying above a key resistance of 2,825.84 -- its 61.8 percent retracement of an April high to a May 7 low -- for the third day in a row.

The next key resistance is seen at around 2,900, said Bill McNamara, technical analyst at Charles Stanley, although "broadly speaking, my expectations are for it to exceed that and run up to 2,950 before the rally peters out".

McNamara said that would tie in with similar expected moves in the S&P 500 and Dow Jones industrial average, which he also expects to add 4 percent on the back of the QE play. "It's a total risk-on rally," he added.

Across Europe, the FTSE 100 index was down 0.5 percent, Germany's DAX was 0.3 percent lower and France's CAC 40 was down 0.1 percent. (Additional reporting by Simon Jessop; Editing by David Hulmes)

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