Markets rally despite mixed data from US

Eurostoxx 50:2,886.43 (+19.13) Frankfurt DAX:7,358.23 (+54.70) Paris CAC:4,027.74 (+49.74)

EUROPEAN SHARES rose in a broad market rally yesterday but ended off their highs after mixed US economic data and some strategists’ comments that equities might be stuck in a range until the macro picture improves.

The number of Americans filing new claims for jobless benefits fell last week, but other data on home sales and regional factory activity suggested the economy remained on a moderate growth path.

“We are a bit rangebound. Some of that macro uncertainty needs to be less visible if we’re going to break out on the upside,” said Bill Dinning, head of investment strategy at Aegon Asset Management in Edinburgh, which has £48.8 billion under management.

The energy sector rose 1.1 per cent, gaining from a surge in crude prices late on Wednesday after US stockpiles fell. BP rose 1.6 per cent, helped by a Bank of America Merrill Lynch upgrade to “buy”.

Investors, however, stayed cautious in chasing prices higher on lingering concerns about Greece’s debt crisis. Greek banks fell 0.5 per cent, with Greece’s benchmark down 0.4 percent.

Heavyweight French insurer Axa gained 2.5 per cent, boosted by an upgrade to “outperform” from “hold” by Daiwa Capital Markets, which cited “the shift towards more profitable new business in life and savings as a positive development”. Banks to gain included BNP Paribas and Barclays, up 2.5 and 1.8 per cent respectively.

Miners slipped slightly, with the sector index down 0.3 per cent, as copper gave back some of the strong gains it made on Wednesday.

“If you look at the world from a company point of view, earnings or margins, it looks pretty healthy, with decent valuations, not overvalued. Relative to government bonds, equities are still attractive,” Dinning said.

Among individual stocks, Swiss luxury goods group Richemont fell 1.5 per cent as its annual profits and margins fell short of expectations due to higher costs.

Danish jewellery maker Pandora plunged 21.6 per cent after the company’s first-quarter results missed analysts’ forecasts.

With 89 per cent of companies in the Stoxx Europe 600 due to report earnings in the current season having done so, 55 per cent of that proportion have beaten or met forecasts. – (Reuters)