European shares rise as earnings roll in
By Helen Reid
LONDON, July 26 (Reuters) - Supportive crude prices and strong results from energy firms and auto companies helped European shares rise on Wednesday.
The pan-European STOXX 600 .STOXX ended up 0.5 percent, broadly in line with euro zone stocks .STOXXE and blue-chips .STOXX50E , as oil and gas shares .SXEP gained 0.8 percent and autos .SXAP climbed 0.6 percent.
"Indications are more positive on the outlook for energy stocks, especially for the most geared such as oil services," said Angelo Meda, head of equities at Banor SIM in Milan.
"While there was a lot of kitchen sinking from firms in first-quarter numbers, they have reset expectations over valuations and cleaned up balance sheets now."
Tullow Oil TLW.L rose 7.9 percent after higher output from new fields helped sales at the Africa-focused oil producer rise 46 percent in the first half, though it also reported impairment charges due to low oil prices. services firm Petrofac PFC.L added 1.4 percent after winning new contracts in Iraq worth $100 million. maker PSA Group PEUP.PA jumped 3.2 percent, leading autos higher after the firm hit a new profitability record, beating analyst expectations with an increase in sales for the first half. euro strength has weighed on earnings expectations for euro zone corporates, particularly those most dependent on exports such as industrials firms.
The common currency rose to a two-year high of $1.1711 on Tuesday.
"We believe that the impact is manageable if we don't go beyond $1.20 to the euro," said Banor SIM's Meda. "If we do, it will start to have an impact and depress European stocks, especially exporters, cyclicals and industrials."
With a quarter of euro zone MSCI Europe companies having reported so far, 40 percent have beaten earnings estimates while 48 percent have missed, according to Thomson Reuters data.
There were already signs of strain among industrials, the sector seeing the worst performance with 86 percent so far having missed expectations.
Among top fallers, chipmaker ASM International ASMI.AS fell 6.2 percent, as its third-quarter order outlook disappointed analysts despite record order intake for the second quarter. have high expectations for tech firms such as ASM, which have made strong gains this year. The sector is up 14 percent, the second best performing in Europe.
UniCredit CRDI.MI fell 0.4 percent after it said it had suffered a cyber attack giving unauthorised access to Italian clients' data. attacks are something we need to live with," said Meda. "It's more positive for cyber security stocks than it is negative for Unicredit."
Swiss pharma company Lonza LONN.S shot up 7.7 percent to a record high after a better than expected second quarter and new mid-term targets.
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