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Europe stocks up on earnings, Portugal hopes

Europe stocks up on earnings, Portugal hopes
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First Published: Tue, Jan 11 2011. 05 31 PM IST
Updated: Tue, Jan 11 2011. 05 31 PM IST
Frankfurt: European shares rose on Tuesday as US aluminum group Alcoa kicked off the earnings season with forecast-beating results, boosting sentiment ahead of the upcoming European earnings season.
Also lifting sentiment, reassuring comments from Portugal’s Prime Minister Jose Socrates helped ease worries over the country’s debt level.
By 5:00pm, the pan-European FTSEurofirst 300 index of top shares was up one percent at 1,145.28 points, with banking stocks reversing recent losses to be among the top gainers.
The STOXX 600 European banks index was trading 1.8% higher, helped by upbeat notes from Citigroup and Societe Generale.
Barclays, Credit Agricole and HSBC all climbed between 2.6 and 5.1%.
“Optimism in the markets today is being partly fuelled by positive news flows from individual companies, but also by Portuguese Prime Minister Jose Socrates reiterating that his country does not need a bailout,” Frankfurt-based analyst Heino Ruland of Ruland Research said.
Speaking to journalists in Lisbon, Socrates said Portugal cut its budget deficit last year to below its target of 7.3% of gross domestic product.
Industrial stocks also made solid gains, with Siemens up 3.3% after saying its first-quarter profit and sales were set to surpass the year-earlier figures on robust factory demand.
LOW RISK APPETITE
Investors, bracing for Wednesday’s key Portuguese bond auction, took comfort from news that Japan was considering buying about 20% of euro zone bonds to be jointly issued later in January to raise funds to support debt-swamped Ireland.
“The news will surely have a calming effect on bond markets today,” analysts at Commerzbank wrote in a note, adding that although Asian support may be positive in the short term, it by no means guarantees restoring investor trust in the market.
“On the surface it looks positive, but it is doubtful whether this will have a long-term effect,” an analyst at Frankfurt-based Postbank agreed.
Commodity-related shares also climbed, rising along with metal prices.
Across Europe, Britain’s FTSE 100, Germany’s DAX and France’s CAC 40 rose between 0.6 and 1.2%, while the Thomson Reuters Peripheral Euro Zone index gained 0.7%.
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First Published: Tue, Jan 11 2011. 05 31 PM IST
More Topics: Markets | Europe | Stocks | Alcoa | London |