Apple suppliers dent European shares as rally flags

By Helen Reid

LONDON (Reuters) - European shares steadied on Wednesday as a global equity rally flagged, with Apple (NASDAQ: AAPL) suppliers hit after the new iPhone release disappointed with a later than expected shipping date.

The pan-European STOXX 600 <.STOXX> index ended flat, paring earlier losses thanks to gains in oil and banking stocks which offset the weak chipmakers and a fall in miners <.SXPP>.

Chipmakers supplying to Apple (NASDAQ: AAPL) were among the worst performers, with AMS (NYSE: AMS) down 3.9 percent, while Dialog Semiconductor (NASDAQ: DLGS) slipped 1.6 percent, while STMicro (NYSE: STM) ended up 0.1 percent.

Traders said their shares were under pressure because Apple's new $999 iPhone X will ship later than expected, on November 3. The price tag could also dent demand for the device in markets such as China.

"With the iPhone coming in around $1,000 it will be interesting to see how healthy demand is," said Mike Bell, global market strategist at JP Morgan Asset Management.

"If it's relatively healthy I think it shows that there is still quite a lot of pricing power for U.S. companies and that consumers have confidence."

Chipmakers have been the best performing among Europe's tech stocks this year, accounting for a large chunk of the sector's outperformance. AMS shares have gained 165 percent year-to-date.

Richemont (NYSE: CFR) fell 1.2 percent despite reporting a sales beat for its first half thanks to a recovery in the Asian luxury market. UBS analysts said weaker retail growth may weigh on sentiment.

Peer Swatch also fell 3.9 percent, with some traders citing concerns that Apple's new watch could also dent the watchmaker's shares.

The merging eyewear and lens makers Luxottica (NYSE: LUX) and Essilor were also among the biggest fallers, both down more than 2 percent. EU antitrust regulators were set to tell the firms of concerns they have over the merger this week.

Covestro <1COV.DE> rose 3.7 percent after German drugs and pesticides group Bayer sold a 9.4 percent stake in the firm, in order to finance part of its acquisition of Monsanto (NYSE: MON).

European stocks were struggling for a further boost after sinking 7 percent over the summer months.

"Our view is that European equities still have potential for upside," said JPMAM's Bell.

"The earnings outlook is quite strong still; Europe has among the highest operating leverage of any major market so if the global economy remains strong that should drive margin expansion and earnings growth."

(Reporting by Helen Reid and Danilo Masoni; Editing by Kit Rees and Matthew Mpoke Bigg)

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