Eurostocks struggle as Microsoft news hits SAP

European shares eased for a third straight session yesterday with software group SAP down after news that global sector leader Microsoft won fewer new big contracts than expected in the third quarter.

A dollar near recent lows against the euro piled on more pain on European metal, paper, chemical and car exporters by making their goods more expensive in America.

But Telecom Italia gained after telling analysts it plans to include in its nine-month results the positive impact of a European Union court ruling against a levy charged by the Italian government on telecoms operators.

Gemany's SAP fell 1.3 per cent to €119.4 in the wake of Microsoft's news which dominated the transatlantic earnings calendar as the Seattle-based firm's widely-held shares tumbled on Wall Street.

The US firm reported higher quarterly profits and revenues, and raised its outlook for personal computer demand, but its caution on new corporate business left investors worrying that company spending was failing to recover.

This contradicted the impression made by chip leader Intel and other tech titans in their results.

Robert Sellar, technology fund manager at Aberdeen Asset Management, said hopes are that budgeting at companies in the final weeks of the year will lead to more expenditure on software and other equipment next year.

"It's one of those wait and see stories," Mr Sellar said, adding that Microsoft was probably dampening expectations to make comparisons with the all-important fourth quarter easier.

By 1538 GMT the FTSE Eurotop 300 index was off 0.15 per cent at 894 points.

Declining shares barely outpaced advancers in moderate turnover that left most sectors under water as investors in Japan and on Wall Street nursed steep losses this week too.

For the week, the Eurotop 300 index is 2.5 per cent down, but remains 4.4 per cent higher for the year.

"We have seen a bit of sell-off and that's healthy, but come this time next week we will be over the worst of the weakness," Sellar said.

The DJ Euro Stoxx 50 index shed 0.14 per cent to 2,485 points.

The earnings season gathers pace next week, with German drugmaker Schering and Norwegian oil firm Statoil kicking off on Monday.

But a key focus will be the US Federal Reserve's interest rate policymaking committee meeting on Tuesday with investors hoping for some encouraging comments on US economic recovery.