Hits to Nokia, Credit Suisse drag down European shares
06/14/2012| 08:45pm US/Eastern
Telecoms group Nokia and banking heavyweight Credit Suisse dragged down European shares on Thursday, with many investors still shunning equities due to fears over the euro zone debt crisis.
The FTSEurofirst 300 index <.FTEU3> fell 0.3 percent to 983.78 points, recovering from an earlier intraday low of 975.24 points.
The FTSEurofirst has been within a tight trading range between 970 and 990 points established back in early May.
Major support is seen around 950, where the index was in December before the first injection of cheap European Central Bank funds spurred a rally, although stocks have fallen more than 10 percent in the last three months.
Finland's Nokia slumped 17.8 percent after issuing a profit warning and announcing 10,000 job cuts, while Credit Suisse dropped 10.5 percent after the Swiss National Bank (SNB) urged the company to boost its capital to shield it from the risk of an escalation of the euro zone banking crisis.
Investors said that though European shares appear to present a relatively cheap buying opportunity, it is still too risky to re-enter European stock markets ahead of elections on Sunday could determine whether or not Greece stays in the euro zone.
"I definitely think there's good value in European shares at the moment but there's too much volatility to take a chance right now," said Hartmann Capital trader Basil Petrides.
TOO MUCH RISK AHEAD OF GREEK VOTE
Investors' fears that markets could take another turn for the worse were highlighted by another rise in Spain's government bond yields, with the country's 10-year bond yield rising to a euro-era record above 7 percent on Thursday.
The Spanish IBEX <.IBEX> stock market rose 1.2 percent, but the index has fallen heavily over the last month after a bailout deal of around 100 billion euros for the country's debt-ridden banks, and the IBEX remains near nine-year lows.
Royal London Asset Management's European equities fund manager Neil Wilkinson said he had done very limited trading of late, due to the uncertainty ahead of the Greek election and a European Union summit due to be held later in June.
"Trading has been very limited in anticipation of the Greek election and EU summit later this month," said Wilkinson, who manages around 300 million pounds worth of assets.
He said he had not changed his portfolio much in recent weeks, remaining overweight in German, French, Dutch, Nordic and Swiss equities compared to southern European stock markets such as Spain or Italy.
Michel Juvet, chief investment officer at Swiss bank Bordier, said he was considering buying Italian shares but added that buying shares ahead of the Greek vote remained fraught with danger.
"We're not brave enough yet to start buying again because there is so much uncertainty," said Juvet.
(Reporting by Sudip Kar-Gupta; Editing by Hugh Lawson)
By Sudip Kar-Gupta