By Danilo Masoni
MILAN (Reuters) - A decline in utility stocks following a profit warning at France's Suez (PA:SEVI) and tumbling tech stocks on fresh Apple worries weighed on European shares on Wednesday although a strong update from Novartis (S:NOVN) provided support.
The pan-European STOXX 600 (STOXX) index was down 0.1 percent by 0923 GMT. Britain's FTSE (FTSE) dipped 0.5 percent and the euro zone's STOXX (STOXXE) fell 0.2 percent, also weakened after the pound and the euro rose to new highs.
In spite of Wednesday's dip, the STOXX 600 remains close to its highest levels since August 2015. Investors have been lured into European equities by the region's economic recovery and expectations of continued earnings growth.
A survey on Wednesday showed euro zone businesses had a much better start to 2018 than expected, ramping up activity at the fastest rate since the middle of 2006.
Suez slumped 16 percent after the waste and water group revised down its 2017 earnings target due to additional costs in Spain and decisions to close services contracts in Morocco and India.
Bank of America (NYSE:BAC) Merrill Lynch downgraded Suez to "underperform" from "neutral."
"We think Suez can start to turn around its fortunes post-2018 by aggressively increasing cost-cutting and pushing for organic growth," it said.
Its fall dragged peer Veolia (PA:VIE) down 4 percent and sent the utilities index (SX6P) down 1 percent, making it the biggest sectoral faller in Europe.
Tech stocks (SX8P) fell 0.8 percent after JP Morgan cut its rating for Apple (O:AAPL) supplier AMS (S:AMS) to neutral, pointing to iPhone X order weakness.
AMS slumped 7 percent, while Dialog (DE:DLGS) and STMicro (PA:STM) both fell around 3 percent.
Elsewhere among top fallers were Britain's Sage (L:SGE) and WH Smith (L:SMWH), both down around 5 percent, following trading updates.
Healthcare stocks (SXDP) edged up, boosted by a 2.4 percent gain in heavyweight drugmaker Novartis (S:NOVN).
The Swiss-based group forecast 2018 operating profit would grow faster than sales as revenue from drugs accelerates and the company exits a period when patent losses dented results.
"We see the top line returning to robust growth in the fourth quarter ... pointing at a successful business turnaround for 2018," Baader Helvea analyst Bruno Bulic wrote, affirming his "buy" rating on the stock.
A.P. Moeller-Maersk (CO:MAERSKb) was another strong gainer, up 2.8 percent. Shares in the world's largest container shipping firm were supported by reports it is seeking a partner for its drilling unit, while a trader also cited an upgrade to "buy" at SEB Equities.