European stocks pare early losses

European stocks pared earlier sharp losses on Wednesday as recently sold-down financial stocks continued to find favour partially offsetting losses for oil companies.

By mid morning, the FTSE Eurofirst 300 was down 0.4 per cent to 1,328.76, Frankfurt's Xetra Dax fell 0.6 per cent to 6,928.47, the CAC 40 lost 0.4 per cent to 4,820.14 and London's FTSE 100 shed 0.8 per cent to 5,863.6.

ABB (NYSE:ABB), the Swiss engineering group, was the biggest faller on the Eurofirst after chief executive Fred Kindle announced "irreconcilable differences" with the board had forced his exit - a surprise move, given the company's turnaround from near bankruptcy under his stewardship.

Indeed, the company announced its much better-than-expected fourth quarter results a day early to try to soften the blow and announced also a SFr2.2bn share buyback. The shares, however, fell 9.7 per cent to SFr24.78.

"Fred Kindle is probably the most successful CEO in ABB's history and for him to resign during its most successful trading period will be a shock to the market," said Citigroup in a research note.

Peugeot gained 5.2 per cent to EU50.10 after the French carmaker reported an unexpectedly strong rise in full-year operating profit and raised its profit margin target for 2008 to 3.5 per cent.

Norwegian telecoms group Telenor (NASDAQ:TELN) fell 4.8 per cent to NKr104 after missing expectations with an 11.6 per cent fall in fourth-quarter core profit.

"The outlook for 2008 does not look encouraging," said Mattias Wellander at S&P Equity Research, given weaker than expected core earnings margins and targeted revenue growth of just 5 per cent. S&P downgraded its recommendation to "sell" from "buy".

But shares in Storebrand, the Norwegian insurer, enojyed an almost 10 per cent jump after reporting a rise in fourth quarter profits. Its shares climbed to NKr45.10 after the company said it s new policy would be to by pay out more than 35 per cent of of after-tax profits in dividends.

German steelmaker ThyssenKrupp fell 3.9 per cent to EU33.65 after reporting a drop in its first-quarter profit that failed to better market estimates.

Bigger rival ArcelorMittal met expectations with its results, but its shares still suffered, down 4.8 per cent by mid-morning to EU46.82.