* FTSEurofirst 300 ends 0.3 percent higher
* Market recovers after U.S. growth data
* Healthcare companies up on corporate news
By Atul Prakash
LONDON, Jan 30 European shares recouped early
losses and closed higher on Thursday, with solid U.S. growth
data and "oversold" levels prompting some buying, although the
market remained vulnerable to emerging market concerns.
The FTSEurofirst 300 index of top European shares
finished 0.3 percent firmer at 1,294.26 points. The index had
previously fallen to a session low of 1,281.16 before bouncing
back as far as 1,298.46 following the release of U.S. gross
domestic product data.
Figures showed the U.S. economy was on a solid ground in the
fourth quarter as a result of robust household spending and
strong exports, with the economy growing at an annual rate of
"Short-term 'oversold' levels, in combination with
reasonably good growth numbers from the United States, have
attracted some buyers back into the market," said Christian
Stocker, equity strategist at UniCredit in Munich.
"But investors are very sceptical. They want to be
optimistic, but the current developments in emerging markets
have been stressful for them."
Charts showed that the 9-day relative strength index (RSI)
for the FTSEurofirst 300 was at 34 after slipping earlier this
week below 30, a technically "oversold" market condition that
often results in a bounce back.
A rebound in equity prices was supported by a rally in
drugmakers, with the STOXX Europe 600 healthcare index
rising 1.7 percent to the top of the sectoral gainers' list.
Danish healthcare products maker Coloplast
climbed 7.4 percent after major investment banks such as JP
Morgan, Deutsche Bank and Morgan Stanley raised their price
targets for the stock, a day after the company raised its
full-year revenue guidance.
But gains were eclipsed by a 1.1 percent decline in food and
beverages shares, led lower by a 4.7 percent fall in
Diageo after the world's biggest spirits company
reported a worse-than-expected slowdown in sales growth in the
last six months.
Analysts said the stock market was likely to remain volatile
because of slowing Chinese growth, the withdrawal of U.S.
monetary stimulus and a selloff in emerging currencies.
"A correction following the crisis in emerging market
currencies has given an opportunity for investors to rebalance
their positions," said Lorne Baring, managing director, B
Capital Wealth Management.
"But the market is still vulnerable to sentiment in emerging
The Russian rouble hit record lows against the euro on
Thursday and currencies in South Africa and Hungary hit
multi-year troughs in the latest wave of an emerging market
asset sell-off threatening global economic stability.
Alongside the emerging market worries, investor concern has
focused on the current earnings season, and whether it will
result in profits strong enough to justify lofty valuations
after a bumper 2013.
The STOXX Europe 600 is trading on a 12-month forward
price/earnings ratio of 14 times against its 10-year average of
11.9 times, Thomson Reuters Datastream shows.
"I just don't know how you can justify further multiple
expansion at the moment. The reasons for that multiple had a lot
to do with central bank stimulus which has not been withdrawn
yet but is certainly not continuing at the pace it was," Peel
Hunt equity strategist Ian Williams said.
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