European shares fall on profit-taking after U.S. budget deal
LONDON, Oct 17 (Reuters) - European shares retreated in early trading on Thursday, with a last-minute deal to end the U.S. government shutdown and avert a debt default prompting some investors to take profits from the previous day's highs.
Dutch telecom company KPN fell 8.4 percent, weighing on the market, after America Movil said on Wednesday it would not go ahead with a plan to boost its stake in KPN.
The euro zone's blue-chip Euro STOXX 50 index fell 0.3 percent, after rising to its highest since May 2011 on Wednesday on expectations of a U.S. budget deal.
Germany's DAX index fell 0.3 percent from Wednesday's record highs, while the FTSEurofirst 300 dropped 0.2 percent to 1,262.94 points.
"The U.S. deal was announced as the markets had already priced in the agreement and now profit-takers are seizing this opportunity," Tom Robertson, senior trader at Accendo Markets, said.
The 11th-hour agreement offers only a temporary fix as it funds the government until Jan. 15 and raises the debt ceiling until Feb. 7, so markets face the possibility of another bitter budget fight and shutdown early next year.
"The deal was widely anticipated. Over the last couple of days, the market had seen some nice gains and now people may take some profits on the announcement of the deal. It is 'buy the rumour, sell the news' thinking," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, said.
"However, from a medium- to longer-term perspective, the drivers remain firmly in place to take equity markets gradually higher. The shutdown of the U.S. government will probably not have helped Q4 GDP. Nevertheless the worldwide economic upturn remains on track going into 2014."