London: European shares edged up on Thursday as strong earnings from BT and Sainsbury offset rising concerns that fiscal tightening in Europe could result in a slowdown in the region’s growth.
The FTSEurofirst 300 index of top European shares closed 0.1% higher at 1,049.89 points, its highest closing level in more than a week in a volatile session where the index swung between positive and negative territory.
The index, which rose 1.3% on Wednesday, has soared 8.5% so far this week, on track to post its biggest weekly surge since November 2008, lifted by the massive bailout unveiled at the weekend to tackle the eurozone debt crisis.
Portuguese leaders agreed tough new austerity measures, joining a coordinated eurozone push that has so far calmed the markets’ worst fears of a Greek-style debt crisis spreading. But concerns that the measures could harm growth hurt investor sentiment.
Across Europe, Britain’s FTSE 100 rose 0.9% and Germany’s DAX added 1.1%, but France’s CAC 40 fell 0.06%, Spain’s IBEX dropped 1.1%, Italy’s MIB shed 0.7% and Portugal’s PSI 20 lost 0.8%.
“It’s a positive sign that European economies are starting to act to bring their deficits under control. It’s a tough balancing act and they can’t put recovery efforts under threat,” said Joshua Raymond, market strategist at City Index.
“Sentiment is swaying one way or another every single day and that’s why we are seeing choppy trading sessions.”
Banks were among the biggest sector fallers, with the STOXX Europe 600 banking index down 0.7%.
New York attorney general Andrew Cuomo’s office on Wednesday served subpoenas on four US banks and four European lenders on part mortgage security deals, a source said, targeting Credit Agricole, Credit Suisse, Deutsche Bank and UBS.
Among the gainers, BT Group jumped 10.9% after the telecom carrier’s full-year results beat market expectations.
J Sainsbury rose 3.2% as Britain’s No.3 grocer beat forecasts with an 18% rise in full-year profit, but said it expected a tough 2010 with little or no food price inflation and consumers hit by higher taxes.
Vallourec rose 6.3%. The seamless tube maker said after markets closed on Wednesday that quarterly sales slumped by a third but gave a slightly rosier first half outlook.
SAP AG fell 1.1% after the German software company offered to buy smaller US rival Sybase Inc for $5.8 billion.
Telefonica fell 1.9% after posting lower-than-expected first-quarter results.
Across the Atlantic, the number of US workers filing for jobless benefits fell only slightly last week, highlighting the challenges facing the labour market, while import prices pointed to tame inflation, according to government data.
Markets in Austria, Denmark, Finland, Norway, Sweden and Switzerland were closed for Ascension Day.