* FTSEurofirst 300 up 3.17 points 1,283.16
* Miners, autos boosted by upbeat China data
* Daimler gets Q3 profit boost
* Earnings beats waning, pressure on valuations
* Ericsson, Gemalto fall as Q3 results disappoint
By David Brett
LONDON, Oct 24 Mining and auto stocks lifted
European shares on Thursday after encouraging manufacturing data
from big consumer China, but mixed earnings from companies
trading on high valuations capped gains.
Mining shares rose 0.6 percent after the flash Markit/HSBC
Purchasing Managers Index (PMI) for China hit a seven-month
high, although volumes were comparatively lower than in the
broader market, suggesting investors were not fully committed to
Societe Generale analysts sounded a cautious note on the
outlook in China, arguing that with growth stabilising after a
slowdown policymakers seem to be shifting their focus back to
"The leadership still intends to delever the economy, which
is the main reason behind our call that the secular deceleration
trend is far from over," it said.
On the broader mining sector, UBS said in its commodity
strategy that it saw upside risks to its house view and
consensus on gold and silver in the year ahead.
Its preferred precious metals stocks boasted strong returns
and good cost control and included London-listed Fresnillo
. Among industrial miners, UBS has a strong preference
for low-cost producers with the potential to raise cashflow
sharply, namely Rio Tinto and BHP Billiton.
Gains among miners helped the FTSEurofirst 300 rise
3.17 points, or 0.3 percent to 1,283.16 by 1030 GMT, after
dipping 0.6 percent dip on Wednesday.
The index has rallied 35 percent since June 2012.
Auto stocks climbed 1.2 percent with most of the
gains coming from German car maker Daimler.
Daimler jumped 2.3 percent after its results for the three
months through September beat forecasts and it announced
full-year profit would meet market expectations.
Nordic banks DNB and SEB, Swiss
industrial group ABB and WPP, the world's
largest advertising company, also rallied after quarter results.
But after a strong start to the earnings season the
percentage of companies beating or meeting analyst estimates has
fallen to 53 percent from 63 percent earlier this week,
according to Starmine data, which is roughly in line with the
Mobile telecom gear maker Ericsson <ERICb.ST > led the
technology sector lower, skidding 6.5 percent, and Dutch digital
security services provider Gemalto GTO.AS shed 3.2 percent, both
hit by disappointing quarterly results.
"Earnings momentum is becoming a concern," Tim Whitehead,
strategist at Redmayne-Bentley, said.
"Despite all the fundamental and structural problems
European equities have done extremely well, and it could be that
they mark time until expectations are met on earnings
performance and then you might get a further re-rating."
A strong run of gains has seen the Stoxx 600
re-rate on a price-to-earnings of 13.29 times against a 10-year
average of 12 times, according to Datastream, so focus is
falling on corporate earnings, which are under pressure to
justify the re-rating.
"So far, the year-to-date equity rally remains a multiple
expansion story and doubts arise on how sustainable this can be
in case earnings revisions do not turn around any time soon,"
Deutsche Bank said in a note.