European shares pull back before the announcement by the Fed (MarketWatch) (30-01-2008)

LONDON (MarketWatch) - European shares were retreating on Wednesday as investors remained nervous before the Fed’s rate decision due after European markets close. Also the extent of the new write-downs from banking groups UBS and BNP Paribas as well as a negative note on the auto sector hurting stocks.

The pan-European Dow Jones Stoxx 600 index moved down 0.7% to 322.20, dragged lower by auto-related stocks after downgrades by Goldman Sachs. Michelin lost 3.7% after the tire maker was downgraded to sell and Volkswagen fell 1.7% after it was cut to neutral.

Shares in Swiss banking group UBS lost 0.5% in Zurich after it said that it will report a net loss of around 12.5 billion Swiss francs ($11.4 billion) for the fourth quarter, after higher-than-expected write-downs from its U.S. mortgage exposure.

Shares in French bank BNP Paribas fell 1.8%. The firm said that it expects its fourth quarter profit to fall around 42% to 1 billion euros in the face of a “deepening crisis” for the financial sector.

Of national indexes, the French CAC-40 index slipped 0.8% to 4,899.74, the German DAX 30 index moved down 0.5% to 6,862.18 and the U.K. FTSE 100 index lost 0.7% to 5,846.20.

U.S. stocks closed with solid gains on Tuesday, fueled by expectations of another interest-rate cut on Wednesday from the Federal Open Market Committee.

In Germany, shares of SAP moved up 3.5% after it the firm said it expects software revenue outside a write-down related to Business Objects to climb by between 24% and 27%, after 13% growth in 2007.

Adjusted operating margin is expected in a range of 27.5% to 28% after 27.3% margins in 2007.

The company had earlier guided on fourth-quarter results, with net income down 6% to 756 million euros, while revenue grew 10% to 3.24 billion euros. For 2008, SAP

Turning to deal news and shares in French electricity generator EDF weakened 0.6% after a report that it, together with Spanish construction giant ACS, is considering a joint bid for Iberdrola, Spain's biggest utility.

ACS shares moved up 0.3%, while Iberdrola shares had yet to trade.

Source: MarketWatch