Banks lift Europe shares, offset weak oils, techs

By Harpreet Bhal

LONDON (BestGrowthStock) – European shares rose on Tuesday, with gains in financials ahead of results from Goldman Sachs (GS.N: ) more than offsetting weak technology stocks on downbeat earnings from Apple (AAPL.O: ) and falls in oil majors.

By 0825 GMT, the pan-European FTSEurofirst 300 (.FTEU3: ) index of top shares was up 0.1 percent at 1,089.27 points, after closing on Monday at its highest level in nearly six months.

Financials were among the biggest gainers as investors awaited results from U.S. peers including Goldman Sachs and Bank of America (BAC.N: ) for evidence on the pace of recovery in the banking sector.

Societe Generale (SOGN.PA: ), Barclays (BARC.L: ) and Credit Suisse (CSGN.VX: ) added 1.2 percent to 1.8 percent.

“Investors will accept the slowing in the rate of earnings recovery in the financials. I don’t think there should be a huge surprise if we see some impact on the top line as long as margins are holding up,” said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.

“But I don’t think the market will get the same lift from the earnings season as it did in previous quarters.”

Oil majors fell, with the STOXX Europe 600 oil and gas index (.SXEP: ) down 0.6 percent, tracking falls in crude prices after the dollar rebounded on profit taking and after Washington stressed its desire for a strong dollar.

Growing speculation in recent weeks of further quantitative easing measures in the U.S. have put pressure on the dollar, resulting in a boost to commodity prices and commodity-related stocks, with mining shares (.SXPP: ) up 5.5 percent this month, against a 2.6 percent gain on the FTSEurofirst 300 index.

But analysts said uncertainty over how much the U.S. Federal Reserve will inject through purchases of government securities could cause choppiness in the equity market.

“Having priced in QE, markets are wondering whether they have over-anticipated the extent of it. If the only thing that is tempering the market’s expectation of the amount of QE is better-than-expected economic data then that’s still good news,” McAlinden said.

“The most important thing is the economic data, because nobody even knows if QE will work.”


Technology firms in Europe were also lower, after U.S. peer Apple (AAPL.O: ) posted disappointing sales of its iPad tablet computer and IBM (IBM.N: ) reported a fall in new technology services deals.

ARM Holdings (ARM.L: ), Capgemini and Infineon (IFXGn.DE: ) fell 0.8 percent to 2.4 percent.

“It looks as if Apple has a bottleneck problem. It simply can’t produce enough. IBM, in contrast, didn’t deliver on the services side. No surprise that European techs are down,” a Frankfurt-based trader said.

On the upside, SKF (SKFb.ST: ) surged 9.7 percent as the world’s biggest bearings maker raised its financial goals after unveiling forecast-beating quarterly earnings and a $1 billion U.S. acquisition.

The results lifted shares in industrial peers Atlas Copco (ATCOa.ST: ), Sandvik (SAND.ST: ) and Alfa Laval (ALFA.ST: ), which rose 1.8 percent to 3.8 percent.

(Additional reporting by Christoph Steitz and Harro ten Wolde in Frankfurt; editing by David Hulmes)

Banks lift Europe shares, offset weak oils, techs