European shares flat; SAP gains on Oracle results

* FTSEurofirst 300 index rises 0.02 percent

* SAP (SAPG.DE: Quote, Profile, Research) gains on U.S. peer Oracle’s results

* BP (BP.L: Quote, Profile, Research) falls after arbitration panel blocks deal

* For up-to-the minute market news, click on [STXNEWS/EU]

By Joanne Frearson

LONDON, March 25 (Reuters) – European shares were flat on
Friday, with fund managers suggesting the overall trend could be
downwards in the short term as euro zone debt concerns persist.

European leaders at their two-day summit gave themselves
until June to increase their temporary rescue fund for indebted
eurozone countries, and some equity investors still remained
concerned about euro zone sovereign debt problems after Standard
& Poor’s downgraded Portugal by two notches on Thursday.
[ID:nL3E7EP027] [ID:nWNA4461]

Economists suggested Portuguese yields were above levels
that were deemed sustainable and a bailout was likely, though
some analysts suggested this was increasingly being priced into
equity markets and overall the Portugal market was small.
[ID:nLDE72O009]

By 1214 GMT, the pan-European FTSEurofirst 300 (.FTEU3: Quote, Profile, Research)
index of top shares was up 0.02 percent at 1,123.75 points after
rising earlier to its highest level since March 11, when a
massive earther and tsunami hit Japan.

“The market was being helped by good company results and
positive outlook statements, investors have been buying on
dips,” Colin McLean, managing director at fund group SVM Asset
Management in Edinburgh, which has 630 million pounds ($1.01
billion) assets under management, said.

“However, Europe’s issues are still not resolved and going
into the second quarter there could be some weakness.”

The Peripheral Eurozone Countries Index (.TRXFLDPIPU: Quote, Profile, Research)
slipped 0.2 percent.

On the upside, investors bought technology stock SAP
(SAPG.DE: Quote, Profile, Research) which gained 2.2 percent as traders cited a positive
read across from U.S. peer Oracle Corp (ORCL.O: Quote, Profile, Research) after the
business software results beat forecasts. [ID:nN24301684]

SAP was the top performer on the German DAX (.GDAXI: Quote, Profile, Research) which
was down 0.1 percent, while elsewhere in Europe the FTSE 100
(.FTSE: Quote, Profile, Research) index rose 0.1 percent and France’s CAC 40 (.FCHI: Quote, Profile, Research)
gained 0.1 percent.

But not all technology stocks were on the rise and Autonomy
(AUTN.L: Quote, Profile, Research) slipped 2.4 percent after JPMorgan downgraded the
software firm’s full-year 2012 earnings estimate.

BP FALLS

Elsewhere on the downside, BP (BP.L: Quote, Profile, Research) fell 1 percent, after
an arbitration panel blocked an alliance with the British oil
major and Rosneft (ROSN.MM: Quote, Profile, Research), Russia’s largest oil firm.
[ID:nLDE72N291]

But, looking at the year-end equity view, analysts and
managers were positive and a Reuters poll on Thursday suggested
European shares would still be higher at the end of 2011.

Germany’s benchmark DAX index (.GDAXI: Quote, Profile, Research) and France’s CAC 40
(.FCHI: Quote, Profile, Research) seen closing this year around 11 percent and 13 percent
higher, respectively. [ID:nLDE72M24M]

Meanwhile, equity valuations on Thomson Reuters Datastream
showed the STOXX Europe 600 (.STOXX: Quote, Profile, Research) pricing forecast earnings
at 10.2 times, below a 10-year average of 13.6, while the S&P
500 (.SPX: Quote, Profile, Research) has a one-year forward price-earnings ratio of 12.5
times.

Analysts suggested higher dividends would also tempt
investors back into the market.

“With investors quite keen to persuade company management to
return more cash to them, I think dividend growth, in aggregate,
could surprise slightly to the upside,” said Ian Williams,
strategist at Altium Securities.

The 12-month forward dividend yield for the STOXX Europe 600
index was at 3.3 percent compared to the Dow Jones Industrial
average index (.DJI: Quote, Profile, Research) at 2.7 percent, according to IBES Thomson
Reuters Datastream.
($1=.6217 pounds)
(Additional reporting by Simon Jessop; Editing by Greg Mahlich)

European shares flat; SAP gains on Oracle results