Earnings news spurs European gains

European equities moved higher by lunchtime on Thursday, helped by strength in the oil, financials, travel and media sectors, on a busy day for corporate earnings releases.

The FTSE Eurofirst 300 rose 4.6 points, or 0.3 per cent, at 1,514.98 while the German Xetra Dax added 20.2 points, or 0.3 per cent, at 6,721.8 and the French CAC 40 gained 30.2 points or 0.5 per cent at 5,592.02.

Dexia led the FTSE Eurofirst 300 with a gain of 3.9 per cent at EU22.70 after the Franco-Belgian bank was upgraded from “neutral” to “outperform” by Exane BNP Paribas.

Alsthom added 2.6 per cent at EU96.30 after the French industrial group reported encouraging growth in new orders and said profit margins should improve in the second half of the year as along. Third quarter sales were in-line with market expectations at EU3.4bn.

Beiersdorf rose 2 per cent to EU48.78 after UBS upgraded the maker of Nivea skin cream from “neutral” to “buy” and raised its price target from EU46 to EU60. UBS said it expected 7 per cent like-for-like sales growyth over the medium term and further improvement in Beiersdorf’s margins.

Novartis dipped 0.4 per cent at SFr73.30 after the Swiss drugs giant posted record full-year year of sales and profits but warned growth would slow in 2007 before picking up again from 2008.

“The outlook for 2007 is as expected, but investors should keep in mind that given considerable uncertainty around the timing and uptake of new products, we believe guidance at this stage can most likely be considered as preliminary and potentially conservative” said Alexandra Hauber of Bear Stearns.

Merck was 0.6 per cent firmer at EU90.31 after the German drugs and chemicals company beat analysts expectations with a 58 per cent increase in fourth-quarter operating profits to EU303.3m, helped by a recovery in the sales of liquid crystals used in televisions and mobile phones.

Allianz slipped 0.4 per cent to EU153.64 after the German insurer offered to buy out the minority stake AGF, 1.7 per cent higher at EU126.80. Allianz will pay EU7.5bn in cash and EU2.3bn in shares for the 42.2 per cent of the French insurer that it does not already own.

The minority buyout has been expected for some time but with CNP’s shares up by 50 per cent over the past 12 months, it was seen by some as an expensive deal.

Some investors would prefer Allianz to have used the funds to buyback more of its own shares but traders said the deal increased the potential for balance sheet restructuring.

TietoEnator dropped 14.5 per cent to EU20.15 after a profit warning from the Finnish IT services provider, ahead of its fourth quarter and full-year earnings figures on February 6.

Patrick Standaert of Bear Stearns said the warning suggested TietoEnator was unlikely to achieve its 10 per cent margin target for 2007 due to intense pricing pressure across its core Nordic markets and ongoing difficulties in its international expansion.

Oil stocks moved higher, helped by a modest recovery in crude prices with Norway’s Statoil (NYSE:STO) 2.1 per cent higher at 157.75 NKr while Neste Oil of Finland added 1.3 per cent at EU23.28.

Ascom, the Swiss electronic systems company, rose 3.1 per cent to SFr23.30 after Victory Industriebeteilligung, the Austrian corporate raiders revealed they held 20.1 per cent stake.

Ascom’s shares were heavily traded on Thursday, raising suspicion that Victory was trying to raise its stake further.

Victory is the investment vehicle which was behind the takeover of O.C. Oerlikon, the Swiss technology group.