Frankfurt: European shares rose on Thursday, boosted by telecom stocks after results from France Telecom and BT and offsetting a negative reaction to results from Siemens and BASF.
By 1:40pm, the pan-European FTSEurofirst 300 index of top shares was 0.5% higher at 915.16 points. The European benchmark index fell 45% in 2008, but is up about 42% since reaching a life-time low on 9 March.
“The earnings season gives the market a nice tailwind. Investors should not become careless but we are far from the end of the world,” said Roger Peeters, strategist at Close Brothers Seydler.
“Most figures are affected by the economic crisis but not worse than recently expected.”
Telecom stocks added most points to the index, and the DJ STOXX European Telecoms Index was the second-biggest sectoral gainer, up 1.8%.
France Telecom shares advanced 3.2% after the company posted higher than expected first-half operating income but warned of a slowdown in activity in the second half.
BT Group surged more than 11% after it posted a better than expected 3% fall in first-quarter adjusted core earnings and said it was on track to deliver cost reductions after a “solid” start to the year.
Deutsche Telekom and Vodafone rose 1.6 and 1.7% respectively and Spanish group Telefonica advanced 0.8% after it announced a slight rise in first-half profits.
Mining stocks were the top sectoral gainers, with the DJ STOXX European Basic Resources Index up 2.2%, and Rio Tinto, BHP Billiton and ArcelorMittal were all 1.1-3% higher.
Shares in engineering conglomerate Siemens declined 2.7% after the company reported a sharp decline in third-quarter operating earnings.
“All-in-all the quarter shows a mixed picture (for Siemens) in our view. While the order intake disappoints, the sector profit shows a sound backlog execution within the sectors. Regarding the order intake the main deviation to our expectations is coming from the Industry sector,” said DZ Bank analyst Karsten Oblinger.
Shares in BASF, the world’s largest chemicals maker, fell 5.5%, as its second-quarter net income came in below analyst expectations.
And Deutsche Bank dropped 3.2%to euro45.66 after Commerzbank downgraded the company to “hold” from “add”, following the release of quarterly figures on Tuesday.
“Since our 2010 estimate remains virtually unchanged the target price is maintained at 50 euros, which offers only limited upside versus the actual share price,” Commerzbank wrote in a note. However, the DJ STOXX European banks sector index was up 0.2%.
Royal Dutch Shell was up 0.1%. The oil major posted a 70% drop in second-quarter net profit, not as bad as analysts had expected according to market forecasts.
Across Europe, the FTSE 100 index was up 0.4%, Germany’s DAX dropped 0.2% and France’s CAC 40 edged 0.2% higher.