European shares end higher on earnings optimism

By Joanne Frearson

LONDON (BestGrowthStock) – European shares ended at their highest in more than a week on Friday, led higher by miners, as strong corporate results and encouraging economic data improved market sentiment.

Investors traded cautiously throughout the session ahead of results of stress tests for 91 European banks, which came in after the close of the European market.

Organizers of the tests said seven banks would not be strong enough to withstand another recession and would face a total capital shortfall of 3.5 billion euros ($4.5 billion).

“This is not surprising that most of them have passed — the results are in line with expectations,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.

“The market will find good news and bad news in this and the market action on Monday and Tuesday will be very important for the rest of the month. But we will continue to be volatile.”

The pan-European FTSEurofirst 300 index of top shares closed 0.5 percent higher at 1,044.31 points, the highest close since July 14.

Banking stocks were higher, with the STOXX Europe 600 banking index up 0.2 percent. Banco Santander, Royal Bank of Scotland and Commerzbank were up 1.3 to 2 percent.

Stress test results showed five of Spain’s smaller regional lenders, known as cajas, failed the test. Their recapitalization will likely speed a restructuring of the troubled sector.

Banks in Germany and Greece were also seen as weak spots and in need of restructuring, but state-owned Hypo Real Estate was the only German lender to flunk and state-controlled ATEbank

the only Greek bank to fail.

MINERS UP, ADIDAS GAINS

Dutch company Akzo Nobel, the world’s largest paint maker gained 2.6 percent after reporting better than expected quarterly results.

Mining stocks were up as copper rallied to a two-month high, helped by fund buying. Anglo American, Rio Tinto and Xstrata

rose 0.6-1.9 percent.

Adidas shares gained 2.2 percent after the German sporting goods company beat forecasts with a big jump in second-quarter net profit.

British chip designer ARM soared 11.6 percent after signing a new licensing agreement with Microsoft.

On the downside, Ericsson, the world’s number one mobile network gear maker, slipped 7.1 percent after missing expectations for second-quarter core profit, as operators stayed wary about investing and parts shortages again hit sales.

French chipmaker STMicroelectronics fell 3.6 percent as losses at its ST-Ericsson joint venture offset the second-quarter profit (Read more your timing to make a profit.) and stronger than expected sales forecast it published overnight.

The market was also supported by economic data, with German business sentiment posting a record jump in July to its highest level in three years, as a World Cup buzz underpinned spending in Europe’s largest economy.

Britain’s gross domestic product jumped 1.1 percent in the second quarter, almost twice as fast as expected, buoyed by a sharp pick-up in services output and the fastest rise in construction output in almost 50 years.

Technical charts showed resistance for the Euro STOXX 50 index. The euro zone’s blue chip index, was up 0.2 percent at 2,719.13 points, trading just below the 50 percent Fibonacci retracement at 2,737.62 of its fall to a May trough from an April peak.

Across Europe, the FTSE 100 index was down 0.02 percent, Germany’s DAX was up 0.4 percent and France’s CAC 40 was 0.2 percent higher. The Thomson Reuters Peripheral Eurozone Countries Index fell 0.6 percent.

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(Reporting by Joanne Frearson; Editing by Dan Lalor)

European shares end higher on earnings optimism