* FTSEurofirst down 0.2 percent
* Italy’s No.3 lender downgraded by Moodys
* Results weigh on AkzoNobel and Remy Cointreau
By David Brett
LONDON, Oct 18 (Reuters) - European shares edged lower on Thursday, holding below highs reached in September in the wake of ECB action on the debt crisis, capped by concerns over corporate earnings but supported by solid Chinese data.
Investors will focus on a European leaders summit on Thursday in Brussels, where they will try to bridge deep differences over plans for a banking union, although no substantial decisions are expected.
It is vital that Europe’s politicians take steps to keep a lid on the troubled banking sector after the European Central Bank quelled market fears of a meltdown of the financial system.
Shares in Italy’s Banca Monte dei Paschi di Siena, fell 3.2 percent after Moody’s cut its rating by two notches overnight saying the bank may still need to ask for outside help.
By 0742 GMT, the FTSEurofirst was down 2.06 points, or 0.2 percent at 1,116.56, faltering near the highs of around 1,121 reached after the ECB announced its bond-buying plans last month.
“We are close to the top of the current range. We could edge higher if Spain asks for assistance from the European Central Bank, but any gains will likely be short-lived as investors focus on company earnings,” Heinz-Gerd Sonnenschein, equity markets strategist at Deutsche Postbank, in Bonn, said.
Overnight in the United States, poor Q3 earnings reports from the likes Bank of America and Northern Trust reined in optimism and underperformance by behemoths IBM and Intel weighed on equities.
In Europe on Thursday, AkzoNobel NV, the world’s largest paints maker, fell 2 percent after it reported a 2.4 billion euro ($3.15 billion) net loss in the third quarter.
Remy Cointreau shares fell 6.6 percent after the French spirits group said sales growth slowed sharply in the second quarter.
Remy’s results followed a weak update from Diageo, the world’s biggest spirits group, on Wednesday, and proved a drag on sentiment in the sector with Pernod Ricard pulled down 3.0 percent.
Luxury goods company Richemont shed 2.3 percent after Swiss export data showed watch sales fell for the first time in 2-1/2 years, hit by slowing demand in China.
Sentiment surrounding luxury goods firms has been dented in recent weeks after warnings over slowing sales from Burberry and LVMH.
European companies are expected to grow earnings by 7.8 percent in the third-quarter and, although the results season is in its infancy, corporates in Europe have reported a 1.1 percent contraction in earnings, according to Thomson Reuters Starmine data.
Preventing the index from falling further were good gains among the miners, which rose 1.3 percent after data showed the world’s top commodities consumer, China, grew at a rate of 7.4 percent in the third quarter, matching expectations with figures pointing to a year-end rebound in the Chinese economy.
“Sentiment has been buoyed by news that the government sees a Q4 recovery thanks to rising exports ... And signs of it holding up will be welcomed by risk-assets,” Mike van Dulken, head of research at Accendo Markets, said.