Media stocks weigh on hesitant European shares as WPP sinks

LONDON, Aug 23 (Reuters) - Unloved media stocks weighed on European shares on Wednesday, with sharp losses from advertising giant WPP (Frankfurt: A1J2BZ - news) after it cut sales forecasts on weakening demand.

Benchmarks made timid gains as investors' eyes were firmly glued on monetary policy with the Jackson Hole central banker pow-wow beginning in a day, and a speech expected from European Central Bank chief Mario Draghi later in the morning.

The pan-European STOXX 600 rose 0.1 percent while euro zone stocks and blue-chips gained 0.3 percent.

WPP shares fell as much as 11 percent after the world's largest advertising group cut its full-year sales outlook after missing first-half targets due to a drop in demand from consumer goods clients.

The ad agency has been among the worst-performing in the media sector which itself has declined 4.8 percent this year against a buoyant European stock market.

The sector index fell 1.7 percent on the day, with WPP's French peer Publicis (Paris: FR0000130577 - news) also down 2.1 percent.

Potash miner K+S (Swiss: SDF-EUR.SW - news) was a bright spot, jumping more than 4 percent after a report of interest from hedge fund Elliott.

Utilities made the biggest gains as investors reached for the defensive sector with monetary policy uncertainty weighing.

Earnings for the STOXX 600 are set to grow 15.3 percent in the second quarter year-on-year, Thomson Reuters (Dusseldorf: TOC.DU - news) data showed.

Nine of the ten sectors were expected to see an improvement in earnings in what analysts have called a “good, but not great” earnings season after the record-breaking first quarter.

(Reporting by Helen Reid, editing by Kit Rees)