By Danilo Masoni
MILAN (Reuters) - European stocks struggled to hold on to opening gains on Tuesday as tech stocks stayed under pressure after concerns over increased regulation and taxation of large tech companies prompted selling overnight on Wall Street.
Support from Publicis (PA:PUBP) evaporated as its shares turned lower following early gains of as much as 3 percent as analysts showed a mixed reception to its new business plan in a challenging advertising market.
The world's third largest advertising group said it was redoubling efforts to become a consulting partner for global advertisers online to help boost sluggish growth.
The plan envisages a 4 percent underlying sales growth target in 2020 by tapping its digital arm Publicis.Sapient and fostering greater collaboration between its myriad of agencies.
Liberum analyst Ian Whittake affirmed his "Hold" rating on the stock, calling the plan ambitious.
"On a general level, Publicis has taken probably the most 'bearish' view on the future of agencies, which probably reflects its acquisition of IT consultancy firm Sapient, and the wording of the statement reflects that," he said.
By 0932 GMT, the pan-European STOXX 600 (STOXX) index was down 0.1 percent, while the UK's FTSE (FTSE) was up 0.1 percent after hitting a 15-month low in the previous session.
Advertisers and media stocks are among the worst performers in Europe over the last 12 months, as they struggle to compete against big U.S. internet players like Google (O:GOOGL) and Facebook (O:FB), which now face growing regulatory scrutiny.
The European Union is proposing a 3 percent tax on turnover of large companies with significant digital revenues, according to a draft proposal seen by Reuters.
Tech (SX8P) stocks fell 0.2 percent, having lost more than 1.5 percent in the previous session. The sector however remains the biggest gainer in Europe over the last 12 months.
Shares in German software maker SAP (DE:SAPG) fell 1 percent on a negative read-across from disappointing results at U.S. peer Oracle (N:ORCL) which reported a disappointing quarterly update as sales from its cloud business fell short of Wall Street expectations.
"(The) hickup in Oracle's cloud business could hurt SAP sentiment," said a trader in Frankfurt.
UK software company Micro Focus (L:MCRO) however rose 2.8 percent, having lost 46.3 percent in the previous session after its CEO quit and it cut its revenue outlook.
More than 7 analysts cut their price targets on Micro Focus.
In M&A news, Fenner (L:FENR) surged 25 percent after French tire maker Michelin (PA:MICP) announced plans to buy the British engineering company for 1.2 billion pounds.
Fenner shares were traded at 612 pence, just above the 610 pence cash offer from Michelin, whose shares dipped 0.1 percent.
Elsewhere, a sell rating from UBS sent shares in France's BIC (PA:BICP) down 5.5 percent to the bottom of the STOXX.