European shares tick lower on telecoms weakness, but poised for weekly gains

By Sudeshna Ghoshal

Sept 18 (Reuters) - Europe's STOXX 600 .STOXX slipped on Friday, led by losses in telecom stocks, but remained on track for modest weekly gains in a week marked by a retreat in oil prices and interest rate decisions by several central banks.

The pan-European benchmark dipped 0.3% to 640.63 points by 0840 GMT, after rising more than 1% in the last two sessions.

Telecommunication stocks .SXKP were down 2%, with Airtel Africa AAF.L falling 8.7% to become the STOXX's top decliner after Bloomberg News reported that its unit Airtel Money is considering downsizing its London IPO.

Food and beverages .SX3P lost 1.1%, with Nestle NESN.S down 1.3% after Russia seized control of the Swiss food giant's local assets.

Insurers .SXIP fell 1.2%, with Switzerland's Helvetia Baloise HBANC.S, UK's Prudential PRU.L and Legal & General LGEN.L all down around 2% each.

Energy shares .SXEP shed 0.6% as oil prices fell for a third day on hopes of limited Saudi supply disruptions, but remained over the $100-per-barrel level.

Technology shares .SX8P were a bright spot, up 0.6%, with chip-related companies Aixtron AIXGn.DE and Infineon Technologies IFXGn.DE leading sectoral gains.

Despite Friday's pullback, the STOXX was on track for its first weekly gain in three, in a week packed with interest rate decisions from several major central banks including the US Federal Reserve and the Bank of England.

The Fed hiked rates for the first time in three years, while the Bank of England held rates steady, both widely anticipated.

Meanwhile, European healthcare stocks .SXDP were on track to be the best-performing sector this week, followed by insurance, while financial services .SXFP and retail .SXRP were set to be the worst hit.

A respite in selloff in the bond market this week, along with receding crude prices helped risk sentiment, despite the Fed's rate hike.

"In the coming days, it will be interesting to hear from different Fed members ... to understand how they see the economy and the balance between growth and inflation," said Valentin Bissat, chief economist at Mirabaud Asset Management.

Also on the radar are developments ahead of next week's meeting between US President Donald Trump and his Chinese counterpart Xi Jinping.

Among individual stocks, Orange ORAN.PA dipped 4.5% after Morgan Stanley downgraded the French telecoms company to "underweight" from "equal-weight".

LPP LPPP.WA climbed 6.2% after Poland's largest fashion retailer reported a 64% rise in second-quarter net profit.