UPDATE 1-Financials weakness puts brakes on European stocks
* STOXX 600 down 0.1 pct
* U.S. tax reform doubts weigh on banks, financials
* Earnings drive Ahold, Ubisoft higher
* MSCI EMU earnings growth tracking 7 percent (ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)
By Helen Reid
LONDON, Nov 8 (Reuters) - Financial sectors weighed on European stocks on Wednesday as doubts around U.S. tax reform plans dented investor sentiment.
Credit Agricole also weighed, falling after reporting weaker profits, though strong earnings elsewhere brightened the picture.
The pan-European STOXX 600 .STOXX dipped 0.1 percent, in line with euro zone stocks .STOXXE and blue-chips .STOXX50E , as banks, financials and insurance stocks dragged.
Banks .SX7P were the weakest sector, down 0.7 percent and following the lead of financials on Wall Street which dipped partly on skepticism around a much-anticipated Republican plan to cut corporate taxes.
"Some of this is probably down to the tax reform plan, but we have also seen the 10-year yields sliding back again, going in the wrong direction for banks," said DNB equity strategist Paul Harper, adding the popularity of European bank stocks this year could make them vulnerable to dips in sentiment.
Also weighing was French bank Credit Agricole CAGR.PA , which said weak trading had dented third-quarter profits, sending its shares down 4.6 percent. Banco BPM BAMI.MI , BPER Banca EMII.MI and UBI Banca UBI.MI sank 2.7 to 6 percent, driving the Italian index to underperform peers.
Analysts have turned negative on euro zone bank earnings after upgrading expectations for much of the past year as sentiment improved over a recovering economy, according to Thomson Reuters I/B/E/S data.
Elsewhere strong earnings helped stem index losses.
Dutch supermarket chain Ahold Delhaize AD.AS jumped 5.6 percent after profits beat forecasts and it announced a larger share buyback. gaming company Ubisoft UBIP.PA touched a fresh record high after it beat its second-quarter sales target, boosting its shares up 7.8 percent to lead gainers. biggest faller after disappointing results was Austrian materials firm Wienerberger WBSV.VI , though it was outweighed by cement maker Heidelbergcement 's HEIG.DE gains, and the sector as a whole .SXOP was the best-performing.
German firms Symrise SY1G.DE , Brenntag BNRGn.DE and Schaeffler SHA_p.DE also enjoyed robust gains after results.
Shares in German-listed retailer Steinhoff SNHG.DE sank 5 percent after Reuters reported the firm didn't tell investors about nearly $1 billion in deals. two-thirds of the earnings season through, Bernstein analysts described companies' results overall as solid, and said market sentiment had grown more subdued which would help support equities.
Third-quarter earnings for MSCI Europe are tracking 5.6 percent growth in euro terms, according to the latest Thomson Reuters data. This rises to 7.1 percent when looking at MSCI EMU.
"The rate of growth is supporting a turnaround in earnings per share in Europe; that's why we are overweight European stocks," said Francois Savary, chief investment officer at wealth manager Prime Partners.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Euro zone bank earnings revised down
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