Asset managers lead European shares after Ashmore boost

Thu Apr 11, 2013 6:50am EDT

* FTSEurofirst 300 up 0.4 percent

* Asset managers lifted by Ashmore's bumper inflows

* M&S rises on better-than-expected sales

* Defensives wanted as stimulus stifles yield

* Evraz leads miners lower after surprise loss

By David Brett

LONDON, April 11 (Reuters) - Bumper gains for asset managers benefiting from the recent rally in stock markets helped European shares rise by midday on Thursday, as a wave of central bank stimulus continues to support equities.

An explosion in investor interest helped emerging market-focused asset manager Ashmore smash analyst forecasts with net inflows of $7.3 billion in the first-quarter, compared to analysts' estimates of $1.3 billion.

Ashmore's shares were up 14.1 percent.

Rising equity markets, which boost net asset value and generally encourage increased investment, have propelled financial services firms up nearly 12 percent so far in 2013.

Ashmore's results further lifted sentiment among investors in the sector which rose 1.4 percent on Thursday, with companies such as Man Group and Schroders up 7.8 percent and 2.8 percent respectively.

Sticking with results, British high-street retailer Marks & Spencer climbed 3.2 percent after reporting sales slightly better than had been feared.

And oil services firm Petrofac added 2.9 percent following a contract win in Abu Dhabi.

By 1013 GMT, the FTSEurofirst 300 was up 4.41 points, or 0.4 percent at 1,190.58.

European indexes were heading back towards four-and-a-half year highs, partly boosted by Wall Street overnight hitting fresh all-time highs and expectations that central banks will continue to pump stimulus into the economy following recent downbeat economic data, in particular from the United States.

"Central bankers and governments are walking on egg shells because they have increased the expectations that the market always gets what it wants, and obviously if we see a withdrawal in stimulus it will trigger a sell-off in equities," Andreas Hoefert, chief economist at UBS, said.

MORE EASING?

The unprecedented quantitative easing from central banks, which has seen their balance sheets roughly double, has sent investors scavenging for yield in equities.

The percentage of the Europe MSCI universe that has a dividend yield above the German 10-year bond yield is currently just under its all-time high of 78.9 percent.

European equities are up 4.8 percent so far this year, despite economic and political threats to the euro zone's stability, although the rally has been driven unusually by defensive stocks such as healthcare and consumer staples .

Analysts said gains in defensives suggest investors have been pushed out of the risk spectrum by central bank actions, which have crushed prospective returns on the main alternative asset class.

But more stimulus could be on its way, according to Macquarie analyst Daniel McCormack, with the very near-term macroeconomic backdrop shifting and economic data out of most of the developed world likely to disappoint in the period ahead.

Weak economic data and subdued global growth have raised the prospect of more earnings downgrades, which has weighed especially on miners. The sector has shed 12.7 percent so far this year to become the biggest fallers on the STOXX Europe 600

Miners fell 0.9 percent on Thursday, having seen some deep value buying in the last week, with Evraz reigniting fears over earnings in the sector by sliding to a surprise loss in 2012, sending its shares down 8.6 percent.

Sixty-five percent of European miners have so far missed earnings expectations for the full year, compared with a 41 percent miss for the broader index.

A year-on-year growth contraction of 38.7 percent for miners has prompted analysts to cut forecasts for the coming year by an average of 2.6 percent over the last 30 days, according to Thomson Reuters Starmine Data.

Volatile ENRC lost 3.6 percent after a good run, with Exane BNP Paribas cutting its price target on the stock. It was also hit by a report in the Financial Times that a board member was threatening to resign.

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