European shares end higher as tech stocks gain

By Harpreet Bhal

LONDON (Reuters) – European shares edged higher on Monday, with tech stocks Alcatel-Lucent (ALUA.PA: Quote, Profile, Research) and Nokia (NOK1V.HE: Quote, Profile, Research) lifting the sector after a ratings upgrade.

The pan-European FTSEurofirst 300 (.FTEU3: Quote, Profile, Research) index of top shares closed 0.1 percent higher at 1,125.47 points on volumes of 65 percent of the 90-day average, reflecting caution amid ongoing turmoil in the Arab world and Japan’s nuclear crisis.

Gains in technology stocks supported the market, with Alcatel-Lucent and Nokia up 7.9 percent and 3.6 percent respectively on the back of an investment rating upgrade by Goldman Sachs.

Analysts said the broader equity market was in a consolidation phase, hovering below key resistance levels which, if significantly breached, could signal fresh highs.

“While the market has sold off recently, they have come back now to test their prior trend lines which, in theory, should now act as resistance,” said Andrew Dennan, portfolio manager at Astin Capital Management. “It is a period of consolidation as we reach these levels to see if the world’s a better place we go through and if not whether we sell back off again.”

The STOXX Europe 50 (.STOXX50E: Quote, Profile, Research), the euro zone’s blue-chip index, was up 0.1 percent at 2,914.76 points, to hover around its 38.2 percent Fibonacci retracement of a low in November to a high in February.

The market was expected to stay rangebound in the run-up to U.S. non-farm payrolls data for March due on Friday, which was expected to show an addition of 190,000 jobs after a rise of 192,000 in February.

“We still need a lot more answers and I think until we have the U.S. non-farm payroll data out on Friday which will tell us about the strength of the economy, we will continue to drift around,” said Ian Ormiston, fund manager at Ignis Asset Management, which has 1.5 billion pounds ($2.4 billion) in European assets under management.

TECHS GAIN

Banking stocks were on the rise. The STOXX Europe 600 banking index (.SX7P: Quote, Profile, Research) rose 0.5 percent, with traders citing bullish broker comments from Barclays (BARC.L: Quote, Profile, Research) and JPMorgan.

A Reuters report on a possible liquidity deal by European Central Bank (ECB) for troubled euro zone banks also helped reassure investors.

Automakers, however, limited further gains on the index, with the STOXX Europe 600 auto index (.SXAP: Quote, Profile, Research) down 0.4 percent on uncertainty over the impact of Japan’s nuclear crisis on global supply chains.

“We think auto makers such as Daimler (DAIGn.DE: Quote, Profile, Research) will only be impacted short-term due to problems caused by supply chain disruptions in Japan, but over the long-term there will be no sales demand impact,” Ormiston said.

Portugal’s PSI 20 (.PSI20: Quote, Profile, Research) ended 0.3 percent lower and Portuguese bond yields hit new highs as the country’s political turmoil added to uncertainty over its fiscal situation.

The FTSEurofirst 300 rose 3.3 percent last week, after four consecutive weeks of falls, and is up 0.3 percent year to date.

(Additional reporting by Atul Prakash and Joanne Frearson; Editing by Dan Lalor)

European shares end higher as tech stocks gain