UPDATE 2-ECB report eases earnings pain for European stocks


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    * SAP slides after Q2 operating profit plummets 21%
    * Tech stocks down, Netflix also weighs on sentiment
    * Italy's banks jump on prospect of snap elections   

 (Updates to close)
    By Sruthi Shankar and Amy Caren Daniel
    July 18 (Reuters) - European stocks ended lower on Thursday,
as earnings worries ran  high after poor results from software
firm SAP sank technology shares, although hopes of looser
monetary policy from the European Central Bank helped indexes
bounce off early lows.
    After falling as much as 0.7% during the session, the
pan-European STOXX 600 index  .STOXX  closed down 0.2%, drawing
support from a Bloomberg report that ECB staff were studying a
potential change to the bank's inflation goal of near 2%.
    "The ECB changing its targets with regards to inflation
could potentially enable it to be more accommodative for
longer," said Craig Erlam, senior market analyst at OANDA in
    Global stock markets have been recovering strongly from a
sharp correction in May, helped by expectations that central
banks will funnel more cash into the economy to counter a global
slowdown driven by the U.S.-China trade war.
    But a combination of earnings worries, and some slightly
stronger economic numbers which may prevent policymakers from
acting, have weakened sentiment globally in the past week.
    Shares in Europe's most valuable tech company  SAPG.DE  fell
5.6% after it said investors would have to wait till next year
for a major improvement in margins as the business software
group reported a 21% fall in quarterly operating
profit. urn:newsml:reuters.com:*:nL8N24J0N2
    That drove Germany's DAX  .GDAXI  to a one-month low, while
technology stocks  .SX8P  dropped 1.5%.
    "We are not seeing the positive surprises (from earnings)
that you would expect to see with the bar lowered, although it's
a bit early to say that," said Erlam.
    The Wall Street Journal reported overnight that progress
toward a U.S.-China trade deal had stalled while the Trump
administration determines how to address Beijing's demands that
it ease restrictions on Huawei Technologies.
    That, along with some other disappointing earnings,
including those for video streaming leader Netflix on Wednesday,
drove a worsening of sentiment on both Wall Street and Asian
    London-listed stocks  .FTSE  slid 0.5% as the FTSE 100's
internationally focused companies were hurt by gains for the
pound on strong retail sales numbers and a vote by lawmakers to
make a no-deal Brexit harder to achieve.
    Another big decliner was Finland's Wartsila Oyj  WRT1V.HE ,
which slumped 12% after the engineering firm warned that it
expected demand to weaken for its marine and energy businesses.
    Italian banks  .FTIT8300  bucked the gloomy trend, with a
0.4% jump after comments from Deputy Prime Minister Luigi Di
Maio about the future of a coalition government raised
possibility of snap elections that could see a business-friendly
centre-right coalition come to power.  urn:newsml:reuters.com:*:nR1N21N007
    Also limiting losses in Europe's blue-chip index  .STOXX50 
was Swiss drugmaker Novartis  NOVN.S , up 3% after the company
lifted full-year sales and profit targets.  urn:newsml:reuters.com:*:nL8N24J0Q2
    British American Tobacco Plc shares  BATS.L  jumped 5.5.%,
helped by strong quarterly results and a forecast from U.S.
tobacco company Philip Morris  PM.N . 

 (Reporting by Sruthi Shankar and Amy Caren Daniel in Bengaluru;
Editing by Catherine Evans)
 ((susan.mathew@thomsonreuters.com; +91-80-6749-1130; Reuters
Messaging: susan.mathew.thomsonreuters.com@reuters.net))

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