Rise in oil companies' shares steadies European equities

Wed Jun 18, 2014 10:44am EDT

* FTSEurofirst 300 up 0.1 pct

* Oil prices rise as violence in Iraq persists

* Ct Suisse upgrades energy equity sector to "benchmark"

* Investors eyeing Fed decisions (1800 GMT)

By Sudip Kar-Gupta

LONDON, June 18 (Reuters) - European stock markets were steady on Wednesday, hovering near multi-year highs reached last week, supported by shares in major energy companies as violence in Iraq pushed up oil prices.

However, many investors were reluctant to buy new positions as they awaited the conclusion of the U.S. Federal Reserve's two-day policy meeting later in the day.

The price of Brent crude oil rose towards $114 a barrel on Wednesday as Sunni militants pushed forward in northern Iraq, striking the country's biggest refinery and stoking worries about oil exports as some firms pulled foreign oil workers out of the country.

This in turn pushed up the share prices of oil majors such as Royal Dutch Shell, BP and Total which together added the most points to the pan-European FTSEurofirst 300 index.

The FTSEurofirst 300 was up by 0.1 percent at 1,388.96 points in late-session trading, putting it in touching distance of a 6-1/2 year high of 1,398.65 points reached last week.

"The oil sector is one of those sectors where there's pretty steady returns, and the rise in the oil price is helping them," said Terry Torrison, managing director at Monaco-based McLaren Securities.

Credit Suisse strategists also upgraded their position on the global energy equity sector to "benchmark" for the first time in six years, citing expectations of a rise in the oil price and improving corporate earnings in the sector.

"Earnings revisions are at their strongest for 18 months, marginally above the market, and the 10 percent gap between the spot and consensus oil price suggests this should continue," said Andrew Garthwaite, head of global equity strategy at Credit Suisse.

YARA RISES

The euro zone's blue-chip Euro STOXX 50 index advanced by 0.2 percent to 3,280.39 points.

Norwegian chemicals and fertilizer company Yara was among the best performers, rising 4.6 percent which traders attributed to an upgrade from Scandinavian bank SEB, which raised its rating on Yara to "buy" from "hold".

The Fed is widely expected to announce a further $10 billion reduction in its monthly bond buying, staying on course to shutter the programme entirely by year end.

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 Blaise Robinson and Nerijus Adomaitis; Editing by Ruth Pitchford)

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