STOCKS NEWS EUROPE-Unilever drops on profit warning

Shares in consumer goods company Unilever (NYSE: UL - news) drop 3.8 percent, top fallers on the FTSEurofirst 300 in brisk volume, after the company issues a profit warning.

The group said in a statement after the market close on Monday that a slowdown in its emerging markets had accelerated in the third quarter, and that it now expected underlying sales growth of just 3 to 3.5 percent in the period.

Trading volume in Unilever stands at around 70 percent of its 90-day daily average, against the FTSEurofirst 300 on 19 percent.

"Longer term we remain positive on Unilever... However the market is likely to remain in 'show me' mode near term, looking for firm evidence of emeging market stabilization and a step change in rate of margin delivery," Barclays (LSE: BARC.L - news) says in a note.

The bank trims its target price on Unilever, to 35 euros from 36 euros, while maintaining its "overweight" rating on the stock.

Unilever was the 17th least shorted stock on the UK's FTSE 100 with just 0.55 percent of the shares available out on loan, according to data from Markit, well down from just below 4 percent in June, suggesting the market was not anticipating the warning.

The news had a negative knock-on effect on sector peers, with Reckitt Benckiser Henkel and Beiersdorf down 1.5-1.7 percent.

"Exposure for the likes of Reckitt, Beiersdorf & L'Oreal is also likely to weigh. Danone (Paris: FR0000120644 - news) 's guide for around 5 percent growth in third-quarter looks more reassured," Nomura says in a note post the update from Unilever.

"Nestle (VTX: NESN.VX - news) outlook comments at its investor event today will now be a focus," it says.

Reuters messaging rm://tricia.wright1.thomsonreuters.com@reuters.net

david.brett.thomsonreuters.com@reuters.net