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4 years ago
RPT-Miners, banks lead minor recovery in European shares
April 19, 2013 / 11:26 AM / 4 years ago

RPT-Miners, banks lead minor recovery in European shares

4 Min Read

* FTSEurofirst 300 up 0.9 percent
    * European indexes find support at key technical levels
    * Rio Tinto bullish on asset sale as miners rally
    * Earnings worries hit Spectris, SAP, RWE

    By David Brett
    LONDON, April 19 (Reuters) - European shares picked up on
Friday after a five-day selloff on global growth concerns, with
investors tucking into battered banks and miners
.
    By 1047 GMT, the FTSEurofirst 300 and the STOXX 600
 were both up 0.9 percent at 1,158.00 and 286.35
respectively.
    The FTSEurofirst found support at around 1,148 while the
STOXX 660 was supported at 283, levels which both indexes have
bounced off multiple times already this year.
    "Markets have rebounded after a few sessions of selling left
the miners oversold, which has led to some bargain hunting, but
I would say if you have to be in the miners Glencore is
best placed and avoid miners with Russian exposure," Jawaid
Afsar, sales trader at SecurEquity, said.
    He cautioned, however, that the market consolidation could
continue with equity indexes potentially correcting by up to 10
percent from March highs. 
    For broader indexes to avoid further downside high beta
(more volatile) stocks such as miners and banks needed to
maintain a rally, he said.
    Miners gained on Friday, helped by some bullish comment from
global miner Rio Tinto.
    Rio told shareholders it saw a lot of appetite for a growing
list of assets up for sale, brushing aside concerns that a lack
of buyers may complicate its efforts to boost profitability and
slash debt. 
    Mining stocks have shed more than 20 percent this year on
the back falling sales and concerns about the outlook for demand
from China, the world's largest metals consumer.
    Banks, which are down more than 3 percent in 2013,
also bounced back, rising 2.2 percent after a sharp selloff
in the previous session.
    Citi strategist Jonathan Stubbs said the recent pullback in
equities was an opportunity to "reload". European shares
remained attractive on valuation grounds with earnings risk
modest providing GDP does not fall off a cliff, he said. 
    Earnings per share are forecast to rise 5.68 percent this
year on average, according to Thomson Reuters I/B/E/S. 
    European stocks trade on 12-month forward price-to-earnings
of 11.32 times, compared with a long-term average of 12.18
times, according to Datastream.
    
    EARNINGS IN FOCUS
    European shares, however, are down around 3 percent since
last Friday's close on growing concerns that recent economic
data pointed to a weakening of the global economic recovery
which could hit corporate earnings.
    That has pulled European equities further away from
multi-year highs reached in March.
    U.S. investors cut their exposure to European stocks by the
most in a year in the seven days to April 17. 
    Earnings were in focus again on Friday. British engineer IMI
 shed 1.5 percent, with traders citing a readacross from
sector peer Spectris, which reported weak first-quarter
trading.
    Spectris tumbled 12.9 percent.
    "The broad-based slowdown has significant read-across for
other companies in our coverage," Investec said, placing its
forecasts for Spectris under review and initially expecting to
downgrade it by up to 5 percent.
    German business software maker SAP shed 3.2
percent after it posted lower-than-expected first-quarter
operating profit and revenue, reflecting a decline in revenues
in Asia. 
    Germany's No.2 utility RWE meanwhile extended
recent falls, skidding 7.8 percent after warning on Thursday
that it would be "virtually impossible" to maintain current
earnings levels beyond this year.

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