European companies' earnings for the second quarter of the year will be driven down by the high euro and Swiss franc and rising commodity prices, according to analysts at Deutsche Bank.
Companies which could disappoint the market include drugs companies Roche and Actelion, as well as Swiss bank UBS and miner Kazakhmys, the analysts believe.
"We expect Europe’s earnings beat to be lower in Q2 than Q1," they wrote in a note. "The primary reason is currency."
Despite concerns about Greece defaulting on its debt, the euro rose against the US dollar between April and June. The Swissie rose even further because of its status as a safe haven, and finished the quarter stronger by 27 percent against the dollar.
Paint company Akzo Nobel warned in June that its earnings for the quarter would be around 100 million euro lower than expectations, because of rises in the price of raw materials.
Swiss biotech Actelion has flagged a $577 million charge which will affect its Q2 results, after a California court ruling in a complex battle with a Japanese drugs company.
Lonza, a Swiss company which makes ingredients for drugs companies, many of which are based in the US, warned last week of "decreasing profitability" at its main Swiss site, partly because of the strength of the franc.
"Market earnings estimates have kept extremely stable in the run-up to these results, which highlights the risk of disappointment, in our minds," wrote the Deutsche analysts.
"While this is a concern, and its timing couldn’t be worse, we must stress that we would only be worried if there are any signs of a weakness in end demand."
"Currency effects are transitory," they added.
"There is a danger of misinterpretation and we would use any weakness as an opportunity to buy the market."
Out of the companies covered by the bank which report earnings on a quarterly basis, analysts' consensus forecasts expect 7 percent quarter-on-quarter growth in net income and 2 percent sales growth in Q2.
This follows a better-than-expected first quarter of 2011, with 73 percent of US companies and 63 percent of European companies who reported beating earnings expectations.