Heavyweight Shell caps European share gains as results disappoint

Thu Oct 31, 2013 1:33pm EDT

* FTSEurofirst 300 closed up 5.16 points at 1,292.73

* Energy sector leads fallers after Shell's results

* Technip, Novo Nordisk also fall after earnings

* Fed's statement leaves question marks over QE

* Autos lead gainers as Nokian Renkaat beats estimates

By David Brett

LONDON, Oct 31 (Reuters) - Disappointing results from heavyweight energy firm Royal Dutch Shell kept Europe's blue chip share index in check on Thursday, as central bank stimulus continued to fuel appetite for European equties.

Shares in Shell, Europe's third largest-listed company by market capitalisation, shed 5 percent and took 2 points of the FTSEurofirst 300 alone after its third-quarter results undershot forecasts.

The FTSEurofirst closed up 5.16 points at 1,292.73 thanks to gains in banks and the automobile sector, ending the month at a fresh five-year high with the index gaining 3.7 percent in October.

Sentiment towards the energy sector on Thursday, which lagged broader gains, took a further knock after U.S. firm Exxon, the world's largest publicly traded oil company, reported a fall in quarterly profits.

French oil services company Technip was the top faller in percentage terms, skidding 10 percent, after it cut its full-year sales and margin targets for its subsea business.

Away from energy-related firms, Danish drugmaker Novo Nordisk plunged 7.4 percent after missing third-quarter profit and sales forecasts.

According to Thomson Reuters StarMine data, 53 percent of STOXX Europe 600 companies have met or beaten analysts' expectations so far this quarter, roughly in line with the average over the last few quarters, although downgrades to 12-month earnings forecasts have slowed in the past week, according to Datastream.

"The earnings that are coming through are weak but stable but the broader environment is much more supportive of equity prices," said Oliver Wallin, investment director at Octopus Investments.

"The amount of liquidity in the markets and the capacity in Europe and Japan to inject further is generally positive."

The FTSEurofirst remains at five-year highs with the recent rally underpinned by central bank stimulus, which continues to fuel demand for equities and drive down yields on other asset classes.

A slightly less dovish statement from the Federal Reserve overnight, however, raised concerns the U.S. central bank could start trimming its stimulus sooner than foreseen.

"The idea of even a slight reduction in (Fed) bond purchasing albeit in January or February; seems to make the markets very uncomfortable," Farhan Ahmad, a dealer at Tradenext, said.

"From a trader's point of view this represents a shorting opportunity and then finally an end to the great recession that began in 2008 and a return to normal equity markets."

British investors increased their bond holdings to four-month highs in October as uncertainty lingered over how long U.S. interest rates will remain very low.

The European automobile index climbed 1.4 percent, the top sectoral gainer, led by a 5.8 percent jump in Finnish tyre maker Nokian Renkaat after it reported better-than predicted operating profit.

The market also got support from a 1 percent gain in the banking sector, with Spain's Banco Popular jumping 7.4 percent after posting better than expected nine-month earnings thanks to trading and capital gains.

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