European shares up on earnings boost, ECB action hope

Wed Apr 24, 2013 3:50am EDT

* FTSEurofirst 300 up 0.4 percent

* German Ifo eyed, due at 0800 GMT

* Norsk Hydro boosted by Q1 beat

By Tricia Wright

LONDON, April 24 (Reuters) - European shares edged higher on Wednesday, adding to the previous session's hefty gains, buoyed by several solid earnings reports and continued expectations of further monetary easing.

The FTSEurofirst 300 had risen 0.4 percent to 1,187.56 by 0735 GMT, having jumped 2.4 percent on Tuesday to post its biggest gain since August 2012 after weak German data raised hopes of a European Central Bank rate cut.

The German Ifo business climate indicator, due out at 0800 GMT, is expected to dip to 106.2 versus 106.7 in the previous month, and a weak reading could further fuel ECB rate cut talk, traders said.

"I think (the market) will be choppy. Obviously we'll have the Ifo - I'll be surprised if it doesn't come in below expectations. If it does you're going to get all this rate cut speculation," Michael Hewson, analyst at CMC Markets, said.

Aluminium maker Norsk Hydro was a solid gainer early on, ahead 2.7 percent after unveiling first-quarter core earnings that beat expectations.

Out of the 14 percent of the STOXX Europe 600 companies that have reported first-quarter results so far, about 51 percent of them have met or beaten analysts' forecasts according to Thomson Reuters StarMine Data.

The earnings season in the United States has got off to a stronger start, with 74 percent of S&P 500 companies meeting or beating expectations so far.

The euro zone's blue chip Euro STOXX 50 firmed 0.5 percent to 2,676.80 following a 3.1 percent advance on Tuesday which saw it break above its 50 and 100-day moving averages, leading analysts to adopt a more positive stance.

"I'm quite bullish about the STOXX50E," Craig Erlam, analyst at Alpari, said.

"I think the next major target will be this year's highs around 2,750, although we won't necessarily hit that this week. Along the way, I expect the index to find resistance around 2,682, 2,692 and 2,717 (previous levels of support and resistance)."

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