London: European shares ticked higher early on Wednesday as banks gained ground, offsetting the impact of Roche, which tumbled after a cancer drug setback, while company results sent mixed signals.
At 2:00pm, the FTSEurofirst 300 index of top European shares was up 0.3% at 789.77 points.
The index is up 7.6% this month and has risen 22% from a 12-year low hit in early March, driven largely by hopes that the banking sector, worst hit by a global credit crisis, was turning the corner.
Financials were broadly higher after US Treasury Secretary Timothy Geithner indicated most US banks have sufficient reserves to protect against possible losses.
Barclays jumped 7.7%, while ING, Allianz, BNP Paribas , AXA, Credit Suisse, UniCredit and Deutsche Bank posted gains of 2.1-4.8%.
There were continued signs of a recovery from some company results, but the overall picture was mixed.
Swedish home appliances maker Electrolux jumped 12% after it said good cash flow would help it ride out the economic slump, while Heineken fell 6% after posting a drop in beer volumes.
“In the medium term we’re trying to find a bottom - that’s the bottom line,” said John Haynes, strategist at Rensburg Sheppard.
“The test is the earnings season, that stocks suffer bad news but react well to that. So far they’re not passing that test but not failing it decisively either.”
Across Europe, Britain’s FTSE was up 0.2%, Germany’s DAX up 0.4% and France’s CAC was up 0.4%.
Roche depresses drugmakers
Roche slid 10% after a late-stage trial of its key cancer drug Avastin showed that it did not prevent the recurrence of colon cancer in patients who have undergone surgery.
GlaxoSmithKline, which reports results later in the session, fell 1.4% and Sanofi-Aventis lost 1.1%.
Glaxo is expected to report a strong rise in sales and profits in sterling terms but the picture could be a lot less healthy once the flattering effects of a weak British pound are stripped out, analysts said.
Among prominent losers was BHP Billiton, which fell 3% after saying it expected output from the world’s bigger copper mine to decline 30% this financial year.
Later in the session, investors will focus on the UK budget and results from Morgan Stanley.
Rensburg’s Haynes said that investor appetite for risk was still limited.