European shares extend rally; Airbus surges

Tue May 13, 2014 4:08am EDT

* FTSEurofirst 300 up 0.2 pct, hits 6-year high

* Airbus surges after better-than-expected results

* Credit Suisse drops on worries over U.S. probe

* First-quarter profits up average 2.5 pct so far

By Blaise Robinson

PARIS, May 13 (Reuters) - European shares inched up on Tuesday, with a key index reaching a six-year high as upbeat company results helped boost sentiment.

Airbus Group surged 5 percent in a relief rally after it reported better-than-expected profits and said its latest jetliner, the A350, was "progressing towards certification" in time for first delivery by the end of the year.

"Airbus Group results are a decent beat... This is a very good start to the year and guidance remains unchanged," Cantor Fitzgerald analyst Andy Chambers wrote in a note.

Shares in ThyssenKrupp also surged, up 5.6 percent after the German steelmaker posted its first quarterly net profit in two years, beating analyst estimates, and raised its forecast for full-year operating profit.

Roughly three quarters into the European earnings season, STOXX 600 companies have posted on average a 2.5 percent rise in profits and a 0.7 percent rise in revenues, according to data from Thomson Reuters StarMine, fuelling hopes of a long-awaited rebound in European corporate profits this year.

"This first-quarter earnings season reflects the recovery in of the macroeconomic landscape and although it's moderate, the negative currency impact seems lower than in the previous quarter," said Joffrey Ouafqa, fund manager at Convictions AM, in Paris.

"If the macro recovery is confirmed, company results and share prices will follow, that's what the market needs at this point because stocks are fairly valued now."

At 0755 GMT, the FTSEurofirst 300 index of top European shares was up 0.2 percent at 1,367.37 points, a level not seen since May 2008.

The gains in European equities mirrored a rally on Wall Street on Monday, with both the Dow Jones industrial average and the S&P 500 hitting record closing highs.

Shares in Credit Suisse dropped 2.6 percent after sources told Reuters New York state's banking regulator is seeking hundreds of millions of dollars from the Swiss lender in its probe of potential tax evasion, which could push an eventual settlement with U.S. authorities over $2 billion.

Europe bourses in 2014: link.reuters.com/pap87v

Asset performance in 2014: link.reuters.com/gap87v

Today's European research round-up

(Additional reporting by Sudip Kar-Gupta in London and Alexandre Boksenbaum-Granier in Paris; Editing by John Stonestreet)

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