European shares creep higher after firmer GDP data

Fri Feb 14, 2014 4:19am EST

* FTSEurofirst 300 up 0.1 percent

* Firmer German, French growth data lifts sentiment

* ThyssenKrupp, Anglo American boosted by robust results

By Tricia Wright

LONDON, Feb 14 (Reuters) - European stocks advanced on Friday, notching their seventh rise in eight sessions, as firmer economic growth in Germany and France fuelled expectations of a rebound in corporate profits in Europe this year.

The market has recovered third-quarters of its post emerging markets sell-off, buoyed by signs of improvement in regional economic growth, strong numbers from companies including ThyssenKrupp and the prospect of a centre-left leader in Italy.

The FTSEurofirst 300 was up 0.1 percent at 1,327.23 points by 0909 GMT. The index has risen some 5 percent from an early February low.

The French economy grew 0.3 percent in the final quarter of 2013, slightly beating expectations and boosted by corporate investment, and German economic growth unexpectedly accelerated to 0.4 percent on a rise in exports and capital investment, data showed.

Meanwhile, Italy's economy grew marginally at the end of last year for the first time since the middle of 2011, data showed, confirming market expectations.

The broadly buoyant data overshadowed a surprise drop in U.S. retail sales in January and data showing more Americans filed for jobless benefits last week, though markets were consoled by the temporary negative impact from adverse weather conditions.

German industrial conglomerate ThyssenKrupp rose 2.7 percent, among the top risers on the FTSEurofirst 300 , after a smaller loss at its Brazilian steel mill helped it post a better-than-expected quarterly operating profit.

These and other upbeat results on Friday belied a lacklustre showing in the current European quarterly earnings season.

Half way through, only 58 percent of companies have beaten or met earnings expectations, while half have missed revenue expectations, according to Thomson Reuters Starmine data.

Analysts are, however, confident of a pick-up in earnings later in the year.

"We've got some better economic figures coming out, some more revenue streams, some more jobs basically, not lots but more than last year. That should mean that with companies lean and mean, with margins high, that you get some decent earnings growth," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.

Gijsels anticipated 10 percent growth in European earnings over 2014, and a corresponding 10 percent rise in the market.

Mining stocks also made good ground, ahead 0.9 percent, in spite of mixed signals from inflation data out of China, the world's top metals consumer.

Investors instead chose to focus on Anglo American's forecast-beating increase in 2013 operating profit, which sent its shares 1.1 percent higher, a day after sector peer Rio Tinto unveiled a huge jump in profits.

Mining companies are recovering from a sharp decline in 2013, after a sector-wide drive to offset falling metals demand with cuts in spending.

The sector has got off to a solid start this year, up more than 6 percent against a rise of about 1 percent on the broader STOXX Europe 600.

"It's not only the demand from China that counts, the commodity prices that count - it's also the fact that all of these companies overinvested in the good times and they are now putting their houses in order," BNP Paribas Fortis Global Markets' Gijsels said.

Italy's FTSE MIB outperformed the wider market, up 0.7 percent, after Prime Minister Enrico Letta said he would tender his resignation on Friday after his Democratic Party (PD) called for him to step aside to make way for a new government.

Letta's decision to quit came after the PD supported a call by its 39-year-old leader Matteo Renzi for a more ambitious government to pull Italy out of its economic slump.

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