Upbeat corporate earnings nudge European shares higher

Wed Jul 17, 2013 3:44am EDT

* FTSEurofirst 300 up 0.2 pct, Euro STOXX 50 up 0.4 pct

* Novartis and ASML raise outlooks

* Q2 European earnings so far seen as relatively positive

By Sudip Kar-Gupta

LONDON, July 17 (Reuters) - European shares edged up on Wednesday, buoyed by upbeat earnings reports from major companies which reassured some traders that the medium-term upward trend for equity markets remained intact.

The pan-European FTSEurofirst 300 index edged up 0.2 percent to 1,193.76 points, recovering from a 0.7 percent fall in the previous session. The euro zone's blue-chip Euro STOXX 50 index rose 0.4 percent to 2,6776.89 points.

Swiss drugmaker Novartis raised its full-year outlook, as did Dutch technology group ASML.

"On the whole, earnings season so far has been pretty good," said Berkeley Futures associate director Richard Griffiths.

While there have been some disappointing second-quarter earnings reports, such as weak results from banking group Swedbank on Tuesday, the majority of company results so far have been positive for market sentiment.

According to Thomson Reuters StarMine data, 63 percent of companies on the pan-European STOXX 600 index, which was up 0.2 percent at 295.76 points, have beaten or met market forecasts with their second-quarter results so far.

CENTRAL BANK SUPPORT

However, many felt that more important for the direction of equity markets was world central banks' continued support of the global economy with injections of liquidity, along with proof of improving company profits.

The FTSEurofirst 300, which has risen some 5 percent since the start of 2013, hit a five-year high in late May of 1,258.09 points. It dropped to a 2013 low of 1,111.11 points in late June on expectations the U.S. Federal Reserve would scale back stimulus measures but has since recovered as central banks have sought to reassure their support will continue.

Berkeley Futures' Griffiths felt short-term moves higher would be relatively limited as investors await fresh clues on future central bank policy.

Griffiths saw Germany's DAX, which was up 0.2 percent at 8,216.61 points, hitting resistance to any near-term moves higher around the 8,250-8,300 point level.

Natixis' technical strategist Ouri Mimran saw the STOXX 600 index hitting resistance around the 298.90 point level but felt that if it broke above this, it could advance to 311 points.

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