London: European shares rose on Tuesday, extending the previous session’s 29-month closing high, after encouraging results from corporate heavyweights Barclays and French food group Danone.
The results helped the market shrug off initial weakness after weaker than expected GDP figures from France and Germany, and by 1:14pm, the pan-European FTSEurofirst 300 index of leading shares was up 0.3% at 1,181.52 points.
The index had closed Monday at 1,177.86 points, its highest level since early September 2008.
“Corporate figures continue to come in quite well and, if you look globally, economic figures mostly surprise to the upside,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
Key to the gains more broadly, however, is the “big asset shift” from cash and bonds into equities “which is overruling everything” and encouraging people to keep buying on dips, he added.
Overnight in Asia, stock markets had held broadly steady after Chinese inflation data came in lower than expected but with signs of pricing pressure that should keep Beijing on its road to gradually tighten monetary policy.
Among the top gainers in early trade was Danone, which rose 3% after posting forecast-beating earnings in which it said it would counter food price inflation by cutting costs and raising prices. Also on the upside was UK lender Barclays, with analysts saying investors were encouraged by a strong fourth-quarter performance from its investment banking business BarCap.
“It seems the investment in equities and investment banking has paid off and has given it a good tailwind going into 2011,” said Mike Trippitt, analyst at Oriel Securities.
The Barclays numbers boosted sentiment across the STOXX Europe 600 Banks index and helped it rise 1.2%.
Around Europe, Britain’s FTSE 100 was up 0.1% ahead of January inflation data, while France’s CAC-40 was up 0.4% and Germany’s DAX was up 0.2%.