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European shares hit one-week high as Chinese data boosts cyclicals
* FTSEurofirst 300 index rises 0.7 percent to one-week high
* Cyclical shares rally on results, Chinese data
* Societe Generale surges as profits double
* ECB likely to keep rate intact after BoE's no change
By Atul Prakash
LONDON, Aug 1 (Reuters) - Shares in European cyclicals, mining companies and banks in particular, rose on Thursday on stronger Chinese data and robust corporate earnings, sending the stock market to one-week highs.
The STOXX Europe 600 Basic Resources index climbed 2 percent, the biggest sectoral gain, after a report showed growth in the manufacturing sector in China, the world's biggest metals consumer, picked up slightly last month.
"You are seeing a pro-cyclical, pro-value day, with people switching out of defensives. Cyclical shares are being driven by China data as well as by the earnings reports," Graham Bishop, senior equity strategist at Exane BNP Paribas, said.
"You are going to expect some kind of slowdown in Chinese economic growth in the long term, but I feel comfortable with recent statements from policymakers that they are going to support growth in the near term."
Other cyclicals, which generally perform better than most stocks during an economic recovery, were also in demand. European banks advanced 1.6 percent on positive corporate news, with Societe Generale surging 9 percent after more than doubling its second-quarter earnings.
Denmark's biggest financial institution, Danske Bank , rose 7.9 percent after reporting stronger-than-expected second quarter earnings, while Lloyds gained 7 percent after saying it expected to meet margins and cost savings targets earlier than expected.
"Banks are one of our favourite plays. The sector is geared to the underlying economic improvement, it's cheap, it's a value play," Bishop said.
By 1125 GMT, the FTSEurofirst 300 index was 0.7 percent higher at 1,216.39 points after hitting a one-week high of 1,217.37. It was on track to record its best monthly gain since June 2012.
Investors were waiting for an ECB policy meeting for hints about its stimulus programmes. The central bank is expected to keep rates intact, a day after the U.S. Federal Reserve showed no signs of cutting any time soon its own stimulus programme, that has broadly helped the stock market.
"The Fed's confirmation of what was being anticipated by the market has also eased some nerves," Accendo Markets senior trader Tom Robertson said. The market was likely to stay choppy during an earnings season that has been mixed so far, he said.
Thursday's earnings held surprises on the upside and downside. Sanofi, which reported a steeper-than-expected drop in profits, fell 6 percent, while Aggreko dropped 5.9 percent after saying trading at its power projects business was subdued in the six months to June 30.
According to Thomson Reuters StarMine data, half of the STOXX Europe 600 companies have reported second-quarter results so far, of which 54 percent have met or beaten profit forecasts, while the rest have missed expections.
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