European shares decline as oil prices fall back

By Danilo Masoni and Atul Prakash

MILAN/LONDON (Reuters) - European shares retreated from three-month highs on Wednesday as oil prices fell, but the losses were limited by some solid earning updates, including those of UK chip maker ARM.

The pan-European FTSEurofirst 300 index was down 0.3 percent by 0952 GMT after rising 1.5 percent the day before, when it reached its highest since early January.

Crude oil prices fell on Wednesday after Kuwaiti oil workers ended a three-day strike that had cut the nation's crude output by around half. Sharp losses on Chinese markets also led to some profit-taking after the recent gains.

"There is probably room for a short-term correction ... following the lead from losses in China and in oil prices," said Alessandro Balsotti, portfolio manager at JCI Capital in London.

The European healthcare stocks index fell around 1 percent, the biggest loss for a sector, after a rally in the past two days. The personal and household goods stocks index was down 0.8 percent, the next-biggest loss.

ARM Holdings gained 2.8 percent after reporting a 14 percent rise in first-quarter profit, outperforming a weak semiconductor market, as its most advanced chips were used in an increasing number of smartphones.

Shares in several companies reacted sharply on Wednesday after their announcing quarterly results. About 4 percent of the companies in the STOXX Europe 600 index have reported earnings, of which 60 percent have met or beaten analyst forecasts, according to Thomson Reuters StarMine.

Power grids maker ABB and telecoms operator Telia also rose following earning updates.

Volkswagen rose more than 5 percent, leading the gains on the FTSEurofirst, on optimism it can offer U.S. authorities an acceptable resolution of its emissions-test-rigging case.

(Editing by Larry King)