* FTSEurofirst up 0.3 percent
* China factory outlook boosts miners
* European shares slowly pare Tuesday losses
* WPP, Daimler fall after earnings updates
By David Brett
LONDON, Oct 25 European stocks edged higher on
Thursday led by miners after China said factory output was set
to accelerate, but profit warnings hit WPP and Daimler.
By 0735 GMT, the FTSEurofirst was up 3.26 points,
or 0.3 percent at 1,096.86, as shares stabilised after sharp
losses on Tuesday.
The index has been trading in a tight 30-point range since
early September with recent stimulus action by central banks
capping the downside while fragile global economic growth has
curbed upside momentum.
"We are relatively constructive on markets longer term but
we will remain rangebound in the coming months until we see a
turning point in terms of growth," Philip Poole, global head of
macro investment strategy at HSBC Global Asset Management, said.
Poole continues to prefer equities over bonds on the basis
of relative valuation and backed by dividend yields, which
remain competitive compared to yields on safer government bonds.
Basic resource stocks were the main gainers in early
trade after officials said China's factory output should grow
faster in the last three months of 2012 than in the third
Investors however continue to fret about earnings and
whether the stimulus action from central banks in late summer
will manage to boost growth.
Against a backdrop of underwhelming corporate results, the
U.S. Federal Reserve said it would stick to its stimulus plan
until the job market improves.
In the United States, 59.1 percent of companies have
reported earnings above analyst expectations so far, compared
with 67 percent over the past four quarters, while in Europe 43
percent of companies have so far missed earnings forecasts,
according to Thomson Reuters data.
Finnish forestry group UPM-Kymmene shed 5.6
percent after missing third-quarter expectations, while WPP
, the world's largest advertising group, slipped 2.9
percent after it cut its full-year outlook for the second time
in two months on Thursday.
German car maker Daimler fell 3.4 percent to 36.5
euros after it warned late on Wednesday that it would miss its
earnings forecast this year and its profit margins would not
improve next year as expected, blaming "significantly more
difficult market conditions."
The results prompted Morgan Stanley to cut its target price
on Daimler to 40 euros from 44 euros and reduce its earnings per
share forecasts for 2013 and 2014.
"New cost initiatives are unlikely to stop consensus falling
by circa 10-15 percent for 2013. We move Daimler below BMW
in our preference list," the investment bank said in a
France Telecom fell 0.4 percent after it slashed
its dividend for this year and next in the face of
tougher-than-expected competition from a new low-cost mobile
rival in its key domestic market and a weaker economic outlook.
DEEP VALUE, HIGH EARNINGS
As economic troubles look set to continue, researchers at
data company Markit see investors flocking to stocks with deep
value and high earnings momentum, while short sellers pile into
distressed companies that may not survive to see the economic
"From a quant point of view, deep value and high earnings
momentum shares performed the best in the European universe in
the last three months," Markit said.
Investors were keeping an eye on results from major U.S.
companies such as Apple.
"Today sees Apple report and this could have a big influence
on sentiment over the next few sessions ... given the sheer size
of Apple, any major movements in its stock price will be easily
felt across the broader market," Deutsche Bank said in a note.
But it was not all gloom on the earnings front in Europe.
Smart card-maker Gemalto rose 3 percent after posting
an 11 percent jump in third-quarter revenue.
Consumer goods group Unilever climbed 3.6
percent after it beat expectations with a 5.9 percent rise in
underlying quarterly sales thanks to strong demand from emerging
"Some of the European companies that are associated with
emerging market demand is a good story (for investors to trade
on)," HSBC's Poole said.