London: European stocks surged on Tuesday with Tesco leading retailers up, after the British firm posted a record annual profit.
At 02:31pm (0901 GMT), the FTSEurofirst 300 index of top European shares was up 0.7% at 791.32 points, having recovered from a low of 781.80.
The supermarket giant Tesco rose 5% after the world’s no.3 retailer showed its resilience to the economic downturn, posting a 10% rise in underlying annual profit to £3.1 billion ($4.6 billion), a record for a British retailer.
Rivals Morrison and Sainsbury were up 1.9 and 1.2% respectively. Primark owner Associated British Foods rose 7% after beating forecasts with a 2% dip in half-year profit as growth at its discount fashion chain and sugar sales offset tough trading in other food areas.
But some financials extended declines from Monday, when Bank of America disappointed investors with its results and raised fresh questions about the sector. Lloyds, Societe Generale and UBS were down between 1.9 and 3.3%.
“There are still questions about banks’ earnings and provisions,” said Bernard McAlinden, strategist at NCB Stockbrokers.
“The market is likely to give back some more of its gains. It’s as positive as you can be to say that we’ve seen the lows.”
In macroeconomic news, Sweden’s central bank cut interest rates by 50 basis points to a new record low of 0.5% on to fight the country’s worst recession since the 1940s.
The UK’s Consumer Price index was up 2.9% in the year to March, down from 3.2% the previous month.
Across Europe, Britain’s FTSE 100, Germany’s DAX and France’s CAC-40 rose between 0.4 and 1%.
Oils gained as crude futures steadied below $46 a barrel after a nearly 9% fall on Monday. Total, ENI and BP rose between 0.3 and 1.2%.
Defensives such as utilities gained in the wake of Monday’s slide. EON, GDF Suez and RWE were up between 1.7 and 2.7%.
Miners fell, as metals prices slipped. Anglo American, BHP Billiton and Xstrata were down between 0.9 and 2.3%. Actelion Ltd, Europe’s largest biotech company, rose 9.5% after it posted more than doubled profit in the first quarter, beating analysts’ expectations, as demand for its top-selling drug Tracleer kept increasing strongly. Drugmakers Novartis and AstraZeneca were 1% lower after being downgraded by Bank of America-Merrill Lynch. But Roche, one of the companies the broker said remains among its key picks, was up 1.3%.
US futures were marginally higher. Bank of New York is among US companies reporting on Tuesday.
On Monday, the pan-European index fell 3.5%, following six weeks of gains that had seen it rise more than 26% from its 9 March lows. It fell 45% in 2008, battered by a banking crisis that helped to tip several major economies into recession.