European shares stride into May as earnings power gains
02/05/2017 10:27
* STOXX 600 up 0.3 pct
* Euro zone factory activity hits 6-year high
* Hexpol sinks as Kepler cuts to hold
* Ocado jumps on M&S delivery tie-up report
* Flows recovering at Aberdeen
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By Helen Reid
LONDON, May 2 (Reuters) - European shares kicked off the
first trading day of May with gains underpinned by healthy
corporate earnings, and manufacturing data adding to evidence of
a robust underlying economy in the region.
Financials and energy stocks provided the biggest boost to
the pan-European STOXX 600 .STOXX which was up 0.2 percent.
French bluechips FCHI held near decade highs while Germany's
DAX .GDAXI hovered near a record.
With about a third of the MSCI Europe having reported
first-quarter results, corporate profit growth in the region was
running neck-and-neck with the healthy clip seen in the U.S.
Overall, for the first quarter earnings in Europe are expected
to grow 13.9 percent, according to Thomson Reuters I/B/E/S.
Brokers were watching the first-quarter results season as a
crucial factor in their argument for European equities'
outperformance. urn:newsml:reuters.com:*:nL8N1I06NN
Euro zone factory activity hit a six-year high in April, a
PMI survey showed, as demand remained strong despite rising
prices. urn:newsml:reuters.com:*:nL9N1DN02A
This added to a series of data points indicating the
economic backdrop for European corporates was improving.
"The economy is doing better within Europe, but these also
tend to be global companies," said Isabelle Mateos Y Lago, chief
multi-asset strategist at Blackrock.
"The main reason why we are optimistic is because European
companies are extremely well plugged in to benefit from the
global reflation story, from China and US growth picking up."
British oil major BP BP.L gained 2.9 percent after its
first-quarter profits tripled, thanks to higher oil prices and
production. urn:newsml:reuters.com:*:nL8N1I40ZJ
It fuelled a 0.5 percent rise in Europe's oil and gas sector
index .SXEP , which handily outperformed other sectors. Banks
.SX7P were up 0.3 percent.
Fund manager Aberdeen ADN.L gained 2.9 percent after its
first-half results added to signs of fight back from active fund
managers against the passive tracker funds eroding their market
share.
The pace of outflows from Aberdeen's funds slowed slightly
and revenues rose 10.6 percent thanks to market gains and cost
cuts. urn:newsml:reuters.com:*:nL8N1I4139
Shares in online food delivery company Ocado OCDO.L jumped
up to 8.9 percent. Traders cited a report of a delivery tie-up
with supermarket M&S MKS.L . Ocado's shares are among the
most-heavily shorted in the UK. urn:newsml:reuters.com:*:nL4N1I41YW
Swiss materials company OC Oerlikon gained 2.9 percent after
it raised its targets for sales and orders for 2017, reporting a
strong first quarter. urn:newsml:reuters.com:*:nFWN1I30DM
Among fallers, Swedish polymer producer Hexpol HPOLb.ST
dropped 7.8 percent after broker Kepler Cheuvreux cut the stock
to 'hold' from 'buy', saying that following a recent rally the
company's shares now reflected expected growth.
Kepler analysts were still relatively positive on the
company, saying strong cash flow and balance sheet leave room
for acquisitions to drive growth.
Airport retailer Dufry DUFN.S slipped 3 percent after its
results. The company reported first-quarter organic growth of
7.2 percent, but traders cited weaker than expected earnings and
cash flow.
Jyske Bank JYSK.CO underperformed Europe's financials,
down 3 percent after the Danish bank posted first-quarter
results with weaker net interest income and capital ratio. It
was trading in heavy volume, and set for its worst day in six
months. urn:newsml:reuters.com:*:nL8N1I41ZQ
(Reporting by Helen Reid, Editing by Vikram Subhedar and Ed
Osmond)
((Helen.Reid@thomsonreuters.com; +44 20 7542 7748;))
Keywords: EUROPE STOCKS/