European shares rise in early trade; BP slides

By Brian Gorman

LONDON (BestGrowthStock) – European shares edged higher on Tuesday morning, extending a winning run to three days, with miners up after Australia left interest rates unchanged but with BP leading oil companies lower after its results disappointed.

At 1005 GMT (5:05 a.m. EST), the FTSEurofirst 300 (.FTEU3: ) index of top European shares was up 0.5 percent at 1,022.86 points, having moved in and out of positive territory.

The index rose 1.6 percent in the previous two sessions and is up 58 percent from its lifetime low of March 9. It fell 3.2 percent in January, hit by worries over tougher banking regulations and Greece’s deficit.

“Those worries are still there, but they are very much in the price,” said Justin Urquhart Stewart, director at Seven Investment Management.

“What we are likely to see now is a nice healthy dose of euro fudge, where we are able to sort out Greece. It may not stabilize but it will be neutralized. There is a bit more confidence creeping back in.”

Index heavyweight BP (BP.L: ) slumped 4 percent after reporting a lower than forecast 33 percent rise in fourth-quarter replacement cost profit and saying an operational turnaround could slow this year.

Other energy companies to fall included Total (TOTF.PA: ), ENI (ENI.MI: ), and Royal Dutch Shell (RDSa.AS: ), down 0.8-1.2 percent.

However, miners were higher after Australian interest rates were left on hold and not raised. They were further helped by broker upgrades.

Anglo American (AAL.L: ), Eurasian Natural Resources Corp. (ENRC.L: ), Kazakhmys (KAZ.L: ), Rio Tinto (RIO.L: ) and Xstrata (XTA.L: ) rose 1.5-2.3 percent.

Citgroup added Rio to ‘buy’ from ‘hold’ and raised earnings forecasts for several companies in the sector, based on the broker’s upbeat view on metals prices.

Societe Generale upgraded Anglo American to ‘buy’.

Banks were also on the rise, with gainers including Barclays (BARC.L: ), Credit Suisse (CSGN.VX: ) and Deutsche Bank (DBKGn.DE: ), up 1.2-2.1 percent.

Across Europe, Britain’s FTSE 100 (.FTSE: ), France’s CAC40 (.FCHI: ) and Germany’s DAX (.GDAXI: ) were up 0.3-0.6 percent.

NOVO NORDISK FALLS

World No.1 insulin maker Novo Nordisk (NOVOb.CO: ) fell 1.2 percent even as higher sales of a new diabetes drug helped it to post a smaller drop than expected in fourth-quarter operating profit and raise its 2010 outlook.

Other drugmakers fell, including Shire (SHP.L: ) and AstraZeneca (AZN.L: ) which were down 1 percent and 0.7 percent respectively.

Shares in Mobistar (MSTAR.BR: ) and Belgacom (BCOM.BR: ) fell 5.2 percent and 2 percent respectively after Belgium’s telecoms watchdog said it wanted the country’s mobile phone operators to halve the charges for routing calls this year.

Chip designer ARM Holdings (ARM.L: ), whose results beat forecasts, rose 4.2 percent, boosting its hopes of reentering Britain’s FTSE 100 by replacing Cadbury (CBRY.L: ) which will drop out when taken over by Kraft Foods (KFT.N: ).

Later in the session, investor attention will turn to pending homes sales data from the United States.

U.S. stocks (Read more about the stock market today. ) rose on Monday as better than expected data on manufacturing and earnings from Exxon Mobil (XOM.N: ) revived bullish sentiment after stocks closed out their worst month in almost a year.

European economic news continued to point to recovery. German retail sales rose 0.8 percent month-on-month in real terms in December.

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(Editing by Dan Lalor)

European shares rise in early trade; BP slides