European stocks pare gains

LONDON, England (Reuters) -- European bourses pared their gains in late trade as tech shares turned weaker in jittery New York and Vodafone was thumped.

Swiss Re stood out among firmer insurance stocks on hopes the world's second-biggest reinsurer will provide an upbeat update on policy renewals when it reports on Wednesday.

But many players were preoccupied with news from across the Atlantic, where the first quarter earnings season has barely begun and investors are desperate for signs of a rebound in company profits amid mounting evidence of economic recovery.

"The market is priced for recovery but we need to see a definitive improvement in earnings expectations for large cap sectors such as banks, telecoms, and healthcare, if we are to push higher and we have yet to see that," said Robert Kerr, pan-European equities strategist at Bank of America.

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At 1555 GMT, with most markets closed, the FTSE Eurotop 300 index was 0.23 percent higher and the narrower DJ Euro Stoxx 50 added 0.58 percent.

The Eurotop 300 remains entrenched within a four-month trading range, but strategists hope better earnings outlooks from companies that report, coupled with more good economic numbers, will spur another leg up in prices.

"The risk is on the upside, because the market knows that we are at the end of the earnings cycle, it's just that earnings are not turning as fast as many had hoped," Kerr said.

Vodafone fell 4.54 percent after Investment bank ABN Amro said it cut its "theoretical fair value" estimate for shares in UK mobile phone giant to 149 pence from 180p, as it lowered revenue and earnings forecasts.

Shares in Vodafone, the third biggest company listed in London, have underperfomed the broader European market by almost a third since the start of the year.

Swiss Re added 2.72 percent on solid institutional buying, according to dealers, who said investors were hoping for good news on policy renewals when the group fleshes out its final full-year earnings on Wednesday.

The DJ Stoxx insurance index was the best-performing sector, adding over one percent, followed by technology stocks and consumer cyclicals.

Telecoms led the fallers, followed by energy stocks as the price of crude oil eased amid a slight easing in Middle East tensions. Energy sector leader BP fell 1.48 percent and France's TotalFinaElf dipped 0.53 percent.

U.S. earnings due

In New York, the Dow Jones industrial average rose 0.18 percent and the tech-laden Nasdaq Composite fell over one percent, after both indices had started more strongly.

Trading has been volatile over recent sessions as investors try to predict the quality of first-quarter earnings.

On Monday shares fell after U.S. bellwether International Business Machines issued its first profit warning in a decade but rebounded in early trading on Tuesday after Compaq, the No. 2 personal computer maker, said it expected to meet or beat consensus estimates for first-quarter earnings.

Canada's Nortel Networks, one of the world's biggest telecom equipment makers, then said first quarter revenues would come in below expectations, and local telco Verizon Communications said it expected to book a first quarter charge of $2.5 billion.

But Alcatel, Nortel's French rival and one-time suitor, shrugged off some initial disappointment at the Nortel news to jump 2.87 percent. Swedish peer Ericsson dipped 1.5 percent after announcing a fresh round of job cuts.

Topping Wednesday's bill of U.S. first quarter earnings is struggling Internet media company Yahoo.

Elsewhere, shares in Germany's Software AG lost over thirty percent of their value after the group issued its second profit warning this year.

Shares in MLP rose 5.82 percent after the fast-growing German financial services group said it would increase its 2001 dividend by 32 percent after posting better-than-expected 2001 results.

German postal and logistics group Deutsche Post fell 3.17 percent after the group told analysts profit margins in its key mail division would be lower than many had expected.

Shares in the world's biggest security firm, Sweden's Securitas, fell 2.67 percent after news overnight that its U.S. unit Globe Aviation Services is being sued for negligence by the husband of a highly paid portfolio manager who was killed on September 11 in her World Trade Center Office.