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European shares rise to new 12-month high

Published 10/15/2009, 07:08 AM
Updated 10/15/2009, 07:12 AM

* FTSEurofirst 300 up 0.5 percent; hits 1-year high

* Nokia down after results

* Sainsbury up 8.2 percent on stake talk

* Beverages, pharma stocks rise; miners under pressure

By Brian Gorman

LONDON, Oct 15 (Reuters) - European shares hit a fresh one-year high on Thursday, with analysts pointing to third-quarter earnings beating forecasts, though mobile phone giant Nokia bucked the trend. At 1041 GMT, the FTSEurofirst 300 index of top European shares was up 0.5 percent at 1,021.65 points, having risen as far as 1,022.26, the highest since Oct. 7, 2008.

The index, which jumped 2.1 percent in the previous session, is up more than 58 percent from the lifetime low it hit in early March, as investors have become more confident of the prospects for economic recovery.

Strong earnings from companies including JPMorgan helped the Dow Jones to surge through the 10,000 mark on Wednesday.

"The market has hit a sweet spot in terms of bottom-up and top-down newsflow," said Georgina Taylor, equity strategist at Legal & General Investment Management.

"Earnings numbers have been doing very well. Critically, we're seeing some surprises on the top line, which is what we really needed to sustain and support equities."

"And the economic news has been generally OK," she added.

UK supermarket group J Sainsbury rose 8.2 percent, with traders citing renewed interest from the Qatari sovereign wealth fund. A Sainsbury spokeswoman declined to comment on the talk.

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The Qatari fund built up a stake -- currently around 26 percent according to Reuters data -- during a takeover offer, which they ditched in Nov 2007 due to the credit crisis.

Banks, which have surged 177 percent since hitting a low in March, extended gains.

Index heavyweight Banco Santander was among the risers, up 1.7 percent and hitting a 12-month high after Nomura upped its target price to 12.3 euros, from 11.9, and BofA Merrill Lynch added the company to its Europe-1 list.

UniCredit rose 0.5 percent after Deutsche Bank upgraded it to "buy". Others to gain included Deutsche Bank, Societe Generale and BBVA, up between 0.3 and 2 percent.

Across Europe, Britain's FTSE 100 was down 0.2 percent, Germany's DAX was flat and and France's CAC-40 rose 0.1 percent.

NOKIA FALLS

But not all third-quarter earnings have been positive.

Nokia fell 6.8 percent after the world's top cellphone maker reported a surprise loss for the July-September quarter, hit by a major writedown at its networks unit, though it said demand for handsets had improved.

Investors awaited more earnings results later in the day from companies including Goldman Sachs, Citigroup, Google, and IBM.

Beverage shares were in demand, with Diageo and Pernod Ricard, both fallers on Wednesday, rising 2.1 and 2.1 percent respectively. Anheuser-Busch InBev gained 0.5 percent. The world's largest brewer agreed to sell breweries in nine eastern European countries to CVC Capital Partners for an initial $2.23 billion, passing its target for divestments since its merger a year ago.

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Drugmakers also advanced, with GlaxoSmithKline, Merck and Novartis, rising 0.5 to 1.1 percent.

Miners were the biggest drag on the index as key base metals prices fell. BHP Billiton, Lonmin and Rio Tinto fell 1.5-1.7 percent.

Xstrata fell 2.3 percent after giving up pursuit of rival Anglo American due to "value" issues after many Anglo shareholders rejected its merger of equals proposal and demanded a premium.

Anglo American fell 3.7 percent.

Futures for the Dow Jones, S&P 500 and Nasdaq were flat. Traders will watch inflation data and weekly jobless claims, due out before the market opens. (Additional reporting by Atul Prakash; editing by Rupert Winchester)

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