European blue chips moved gently lower yesterday afternoon, weighed down by retailer Ahold after a credit rating downgrade and chip stocks following a cautious outlook from Infineon.
The third-quarter earnings season continued apace and investors complained bitterly that companies have not provided detailed forecasts alongside their figures.
"Companies are a lot less willing to give a clear outlook. It is difficult to see where sales volume and pricing power is going to come from as companies are keener to reduce gearing than raise capital expenditure," said Richard Champion, a European fund manager at Pavilion Asset Management in London.
Shares drifted without guidance from Wall Street which remained closed in celebration of Martin Luther King Day.
Among other standout movers, Britain's BAE Systems was about five per cent lower on weekend reports the defence and aerospace company could lose a big aircraft contract, and amid share placement talk which the firm dismissed as speculation.
BAE Systems is competing against France's Thales which gained 2.2 per cent.
By 1428 GMT, the FTSE Eurotop 300 index of pan-European blue chips was down 1.06 per cent at 839 points.
Falling issues outnumbered risers by two to one. On Friday, the index slumped to its lowest close since late December.
The DJ Euro Stoxx 50 index was 1.1 per cent weaker at 2,363 points.
Market volatility has come down in recent weeks but remains at historically high levels and is likely to remain so for the foreseeable future, analysts said.
That's because earnings visibility remains poor, geopolitical tensions remain high, and quoted companies are still carrying high levels of debt on their books, which makes their stock behave like a geared instrument, according to Merrill Lynch derivatives analyst Martin Bolt-Christmas.
From more than 50, the implied volatility on short-dated options based on the Euro Stoxx 50 index was now down in the mid-30s, he said.
The oil sector slipped on profit taking after crude oil hit two-year highs late last week on rising concern over the possible impact of a war in Iraq on crude oil supplies from the Middle East.
BP was 1.1 per cent weaker, Royal Dutch dropped two per cent and Shell lost 1.7 per cent.
Shares in Siemens gained 0.6 per cent after the industrial giant told a German newspaper over the weekend that handset sales in the three months to December were up on the year-before level.
"It was an extraordinarily good quarter... I think shareholders will be satisfied with our successes," Siemens Chief Executive Heinrich van Pierer told the Frankfurter Allgemeine Zeitung on Saturday.
Siemens reports on Thursday, along with Finnish handset maker Nokia which fell 0.7 per cent.
Infineon, Europe's second-biggest semiconductor maker, fell two per cent after posting a first quarter loss that was better than most analysts' forecasts, but gave a cautious outlook.
"Infineon is taking a day-by-day approach to its business and that is basically reinforcing investors' concern," said Friedrich Diel, fund manager at Frankfurt Trust.