Europe's leading indices fell back in morning deals Thursday, with strong performances among the banking and telecoms sectors helping to offset falls in oil & gas plays and auto manufacturers.
At 9:52 a.m., the Dow Jones STOXX 50 was down 10.33 points, or 0.3 percent, at 3,377.17 and the Dow Jones STOXX 600 slipped 1.82 points, or 0.63 percent, at 284.95.
In the U.S. overnight, stocks advanced for the second straight session as another decline in oil prices to below $124.50 and several upbeat earnings reports eased some of Wall Street's concerns about the economy.
The Dow Jones Industrial Average rose 0.26 percent. Broader stock indicators also advanced Wednesday. The Standard & Poor's 500 index rose 0.41 percent and the technology-laden Nasdaq Composite 0.95 percent.
Shares also rose in Asia this morning. Japan's Nikkei 225 Stock Average closed at a four week high of 13,603.31, up 2.2 percent, as a weaker yen boosted exporters, while Hong Kong's Hang Seng Index rose 0.6 percent to end the morning at 23,265.53.
In Europe, telecoms was one of only a few sectors to make headway, with the DJ STOXX 600 Telecoms up 0.74 percent as Mobistar reported solid figures for the first half of 2008.
The results for the first half of 2008 'were clearly stronger than anticipated', Rabo Securities analysts said.
'These results should be comforting' given the weak macro conditions and a recent profit warning from peer Vodafone, Nico Melsens at KBC said in a note to clients.
Mobistar shares jumped 7.5 percent, while others in the sector also gained, with KPN up 0.9 percent, BT Group 0.9 percent higher and Belgacom rising 0.7 percent. But Vodafone
Elsewhere, a number of financial stocks were in demand after Credit Suisse posted better-than-expected second quarter earnings.
The Swiss banking giant traced the gains to strength in its wealth management business amid negligible group-wide writedowns, as it unveiled significant cuts in its risk exposure since March.
A Frankfurt-based trader said the promising numbers at the Swiss banking peer were positive for nearly all German financials, but especially those like Deutsche Bank, which are actively involved in trading.
Credit Suisse shares gained 5.0 percent, Deutsche Bank was up 1.3 percent, Societe Generale added 1.0 percent and Credit Agricole ticked up 3.6 percent.
The latter was helped further by Morgan Stanley resuming coverage with an 'overweight' rating and 18 euros price target.
And financials also received a fillip after Morgan Stanley upgraded its sector rating for European financials to 'in-line' from 'cautious'. It also raised London Stock Exchange to 'equal-weight' from 'underweight' on valuation grounds but said it prefers Deutsche Boerse.
London Stock Exchange surged 9.0 percent, while Deutsche Boerse was 1.5 percent ahead.
Lloyds TSB, meanwhile, lost 0.8 percent after Citigroup downgraded its recommendation to 'hold' from 'buy' as part of a UK banks note in which the broker also cut target prices across the board pointing to balance sheet worries.
Elsewhere among fallers, the oil & gas sector was worse off as individual stocks tracked recent declines in the oil price.
Oil is down more than $20 a barrel since hitting a record above $147 just weeks ago. A barrel of light, sweet crude fell $3.98 to settle at $124.44 a barrel on the New York Mercantile Exchange Wednesday.
The DJ STOXX 600 Oil & Gas fell back 1.9 percent, with Total down 2.0 percent, Royal Dutch Shell 1.3 percent weaker, Repsol YPF sliding 1.9 percent and StatoilHydro off 1.2 percent.
Finally, having initially enjoyed news of better-than-expected first-half numbers from Renault, shares in car manufacturers fell back in midmorning deals after the French car maker's CEO said he sees no recovery in the European market in 2009 and expects China car market growth could be 5-10 percent rather than 20 percent previously thought.
Renault shares lost 1.6 percent, while Peugeot -- which Wednesday jumped on the back of its own forecast-beating numbers -- eased 1.9 percent, and Fiat slipped 2.1 percent.
On the economic front, investors were disheartened after euro zone services and manufacturing activity contracted sharply in July, sources said of a key survey.
The euro zone Purchasing Managers Index for services slipped to a five year low of 48.3 in July from 49.1 in June. Euro zone manufacturing activity also slumped, falling to 47.5 from 49.2 in June. Both figures were below expectations.
holly.cook@thomsonreuters.com
hco/ajb
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