European shares recover after fall

Banking leads the way

EUROPEAN shares recovered yesterday from their biggest one-day loss in five months, as a rebound in banking stocks and some positive first-quarter results outweighed weakness in oil and gas stocks.

The pan-European STOXX 600 rose 0.3 percent by 0900 GMT, after hitting a three-week low on Tuesday.

Britain’s FTSE extended the previous session’s losses, dropping 0.1 percent as sterling strength weighed on its constituents, most of which are major exporters.

Banking stocks snapped a six-day losing streak – their longest run of daily losses for 11 months – to rise 1.4 percent, making them the top sectoral gainers. Upside potential Banco Popular and Unicredit led the sectoral gainers, adding 6 percent and 4.4 percent respectively.

Sentiment was helped by Jefferies initiating coverage on Dutch bank ING with a “buy”, saying ING shares had upside potential of 18.7 percent. ING rose 2.7 percent.

Société Genéralé and Credit Agricole topped the CAC 40, each up 2.9 percent.

Basic resources also bounced back, gaining 1 percent, while oil and gas stocks fell 0.5 percent as crude prices dipped on bloated US supplies.

Earnings, which began in earnest from European companies, were mixed.

Meal voucher group Eden- red was a top gainer, up 6.4 percent after it posted higher first-quarter revenue growth and maintained its targets, boosted by growth in Latin America.

“Overall, we are encouraged by the strong start to the year and believe it means fullyear forecasts are well underpinned,” Barclays analysts said.

Oil storage and services company Vopak was also a top gainer after its first-quarter results. The share rose 5.5 percent.

British luxury group Burberry was the top European loser, down 5.8 percent after it reported a slowdown in its fourth-quarter comparable sales growth rate, saying tough conditions in the US outweighed an “exceptional” performance in its home market.

“Burberry has published a strong H2 trading update, but this is driven by FX rather than any substantial underlying improvement in earnings,” Liberum analysts said.

German retailer Zalando fell 4.5 percent after it said it was happy with its first-quarter, despite margin pressure due to post-Christmas sales discounting.

French media group Vivendi was a top CAC 40 faller, down 1 percent after Italy’s watchdog ordered the firm to cut its stake in Telecom Italia (TI) or Mediaset. The Italian broadcaster was among the session’s top fallers, down 3.1 per- cent, while TI fell 1.3 percent.

“Vivendi is very unlikely to sell down its 23.9-percent TI stake, in our view,” Jefferies analysts said.

Shares in British engineering group Cobham fell 10 percent after 683 million new shares were added to trading in its rights issue, raising £512.4 million (R8.7bn). – Reuters