European stocks drop on poor earnings

European equities fell Tuesday, with London hit by poorly-received results from British retailer Marks and Spencer and mobile phone giant Vodafone. In afternoon trade, London's benchmark FTSE 100 index dropped 0.50 percent to stand at 6,814.34 points. Frankfurt's DAX 30 reversed 0.21 percent to 9,639.48 points and in Paris the CAC 40 fell 0.41 percent to 4,451.91, compared with Monday's close. "Dominating the headlines ... were Vodafone and M&S, which both saw falls in their share prices," analyst Chris Beauchamp at trading firm IG said of the London market. Vodafone's shares topped the FTSE 100 fallers board, slumping more than four percent despite surging annual net profits, as the group forecast that earnings would slide in 2014/2015. The stock later stood at 208.53 pence, down 3.97 percent from Monday's closing level. "Those (investors) looking for capital growth will be disappointed that the company expects a drop in earnings for the coming year," added Beauchamp. Marks and Spencer's share price dived 1.96 percent to 422.145 pence, after announcing that underlying profits before tax slid 3.9 percent to £623 million in the 52 weeks to March 29, from a year earlier. That marked the third successive drop in underlying annual profits. The group, involved in a big investment and rejuvenation programme, did well with its food lines but the clothing sector struggled. "Today’s announcement ... has once again prompted shareholders to ask questions about the pace of the latest turnaround strategy," said CMC Markets analyst Michael Hewson. Shares in Credit Suisse meanwhile climbed a day after the Swiss banking giant was fined $2.6 billion by US authorities after pleading guilty to helping Americans avoid taxes. After skyrocketing at open, Credit Suisse shares were later up 1.04 percent to reach 26.340 Swiss francs on the Swiss stock exchange's SMI index. Overall, the SMI was up by 0.16 percent. Meanwhile AstraZeneca's share price fell further, one day after it rejected a 'final' $117-billion takeover bid from US rival Pfizer. The British drugmaker argued that the £55-per-share offer undervalued it, forcing Pfizer to walk away. Shares fell by 0.31 percent to £42.74, having slumped by 11.11 percent on Monday. AstraZeneca's stance sparked criticism from British investment group Schroders, which owns about two percent of the firm. "Schroders notes with disappointment the quick rejection by the AstraZeneca Board of the latest offer from Pfizer and the decision of the Pfizer Board to draw a premature end to these negotiations by calling their latest proposal final," said a spokeswoman. London investors also digested other merger and acquisition activity on Tuesday. The London Stock Exchange's share price rose 0.34 percent to 1,770 pence, after revealing it was in exclusive talks to buy US-based stock-index and asset-management business Frank Russell Company. On the downside, Cobham's share price sank after the British aerospace and defence group agreed to purchase US wireless communications firm Aeroflex Holding Corp. for $1.46 billion. Cobham shares dived 2.37 percent to 304.80 pence on London's second-tier FTSE 250 index, which was up 0.46 percent at 15,450.71 points. In foreign exchange activity, the euro sank to $1.3688 from $1.3709 late in New York on Monday. - Sterling bounces on data - The pound hit a multi-month high against the euro and rose against the dollar, as official data showed Britain's 12-month inflation rate accelerated to 1.8 percent last month, from 1.6 percent in March. The European single currency sank to 81.19 pence -- a level last seen in January 2013. It later stood at 81.33 pence down from 81.52 pence on Monday. The British pound also climbed to $1.6829 from $1.6813. However, the data also revealed that rising British inflation rate was due this year's timing of Easter, which fell in April instead of March. That persuaded many transport companies to increase their prices to capitalise on a peak-time for holidaygoers. "Once the detail of today’s numbers was digested sterling’s initial gains were eroded," said Investec economist Victoria Geoghegan. "Easter effects aside the latest release provides little evidence of significant or broad based price pressures," she added. Elsewhere, the price of gold slid to $1,291.43 an ounce on the London Bullion Market from $1,302 on Tuesday. In Asia on Tuesday, markets mostly rose following gains on Wall Street, but Thailand's main index slipped after the army declared martial law following months of deadly anti-government protests. Tokyo rose 0.49 percent, Shanghai won 0.15 percent and Hong Kong added 0.57 percent, but Bangkok fell 1.13 percent.