* FTSEurofirst 300 up 0.8 pct in best day in a month
* Strong results at Bouygues contrast with weakness at RWE
* Ahold hit by cost-conscious consumers
By Toni Vorobyova
LONDON, Nov 14 European shares rose on Thursday,
cheered by solid earnings from Bouygues and Zurich
Insurance, as well as by signs the U.S. Federal
Reserve may be in no hurry to scale back stimulus under its new
Janet Yellen, President Barack Obama's nominee to head the
U.S. central bank, called for continued action to help the
economy. Her comments eased investor concerns that the Fed could
start to trim its bond purchases as soon as December or January,
boosting risk assets globally.
Data showing that euro zone gross domestic product grew half
as fast as expected in the third quarter put a bit of a dampener
on sentiment. But with the European Central Bank active in
stimulating the economy, the news was not seen as sufficiently
negative to erase equities' gains.
"The economy is still growing but not that dynamically, so
therefore we can be sure that tapering in the U.S. as well as in
Europe will be, at its soonest, in the middle of next year. And
that gives us some support for the market and therefore we are
going towards the new highs in the next couple of weeks," said
Oliver Roth, head trader at Close Brothers Seydler.
The pan-European FTSEurofirst 300 index closed up 0.8
percent at 1,294.27 points - its biggest daily gain in
a month. The EuroSTOXX 50 benchmark of euro zone blue chips
added 1.1 percent to 3,053.69 points.
Gains were capped by concerns about the negative impact of
weaker economic growth on corporate earnings, prompting
investors to focus on companies still able to deliver strong
French conglomerate Bouygues was the top gainer among
European blue chips, jumping 6.2 percent and hitting two-year
highs after beating quarterly earnings forecasts thanks to cost
savings and higher construction orders.
Results also helped insurer Zurich and Belgian financial
services group KBC, which rose 2.5 and 3.6 percent,
Such relative bright spots though, come in an earnings
season when half of European companies have missed expectations,
according to Thomson Reuters StarMine data, putting STOXX Europe
600 on track for its most disappointing set of quarterly results
in two years.
Underscoring the risks, German utility RWE fell
5.1 percent as it joined peers in warning of a deep crisis in
Europe's energy industry that would keep a lid on growth in the
Cost-conscious consumers snapping up cheaper goods,
meanwhile, hit profits at Dutch grocer Ahold, sending
its shares down 5.4 percent.
Public pressure for lower prices is one of the factors
dampening euro zone inflation and raising the risk of deflation
in the region - which would be negative for corporate earnings
and equity markets as falling prices encourage companies and
consumers to delay spending.
Simon Maughan, head of research at Olivetree Financial
Group, said that had contributed to the underperformance of
Europe relative to the United States in the past month.
"The deflation fear is driving the rotation back from
European stocks into the U.S. and we think that is going to
prevail until (the Euro STOXX 50) breaks the 3,100 level," he
"That is going to either be triggered by an improvement in
growth - don't bet on it - or more decisive action from the ECB
introducing unconventional measures."