Europe stocks near 3-week lows
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LONDON, England (Reuters) -- Weak demand and profits gloom in the auto and chemical sectors knocked investor confidence and sent European stocks to near three-week lows on Tuesday, but Ryanair bounced after an EU ruling on state aid.
Ryanair closed 5.2 percent up after EU regulators ruled the Irish no-frills carrier will only have to repay about four million euros of state aid and the company revealed 36 percent growth in January passenger numbers.
The FTSE Eurotop 300 index of pan-European blue chips ended down 0.22 percent at 981.34 points, the lowest close since 980.31 on January 15. Amid good volumes the number of losers to gainers was about three to two.
The narrower DJ Euro Stoxx 50 index lost 0.44 percent to 2,841.26 points.
Strategists said the market was consolidating after hitting 17-month highs at 999.17 in January, that there was enough value left to tempt investors back and that upcoming results would reinforce that view.
"Valuations are still attractive ... we can afford to bet the continuation of the uptrend,'' said Joerg Kraemer, chief strategist at Invesco Asset Management.
"But there are risks from the euro's appreciation and consumers. The upswing we are seeing has not fed through to the labor market...real unemployment is still rising and consumers are still holding back.''
Lack of consumer confidence and company pricing power dominated trade on Tuesday as Volkwagen fell 3.4 percent after the German auto maker said it would offer price discounts on its new Golf V model.
The problem of weak domestic demand is compounded by euro strength against the dollar, which makes European cars more expensive in the United States.
Fragile demand
DaimlerChrysler fell 2.3 percent after a report from Japan's business daily Nihon Keizai said the German car giant and Mitsubishi group had agreed to inject $1.9 billion into troubled Japanese auto maker Mitsubishi Motors.
DaimlerChrysler owns 37 percent of Mitsubishi Motors and posts year results on Wednesday.
The auto sector skidded 2.4 percent to the lowest since December 10, 2003 and German auto makers pushed Frankfurt's DAX down 0.35 percent to 4,057.51 points.
France's CAC closed 0.73 percent lower at 3,638.21 points, Britain's FTSE was up 0.21 percent at 4,390.6 and the Swiss SMI slipped 0.92 percent to 5,735.0.
"Chemicals, drugs and autos are very dependent on sales to the United States,'' said a fund manager. "The European economy is picking up and we should see the benefits soon, but for the moment domestic demand remains weak.''
Chemicals drop
The chemicals sector lost 1.6 percent to hit the lowest since January 7, with Dutch Akzo Nobel a top loser.
Drugs and chemical maker Akzo Nobel shed 4.3 percent after it said net income this year, excluding non-recurring items, would be below 2003 as dollar weakness and increasing generic drug competition exacts a toll.
Swiss Ciba ended down 1.4 percent after it issued a guarded outlook for the year and fourth-quarter profits that fell below the forecast and Clariant fell 3.9 percent.
On Wall Street, the blue-chip Dow Jones industrial average was 0.17 percent higher at 10,515.69 and the technology-heavy Nasdaq Composite Index gained 0.21 percent to 2,067.47.
Anglo-U.S. fund firm Amvescap rose 2.8 percent after it vowed a quick end to a U.S. probe into alleged market abuses.
But blue-chip Munich Re gave up 2.6 percent after Merrill Lynch cut the German reinsurer to ``sell.''
France's Lagardere, which groups the world's biggest magazine publisher and a 15 percent stake in European aerospace firm EADS fell 3.7 percent after it told analysts it wants to be a pure media player in five years.
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