* FTSEurofirst 300 index rises 1.1 percent
* Indexes rebound after hitting "oversold" levels
* Alcatel-Lucent surges 11.5 percent after results
By Atul Prakash
LONDON, Feb 6 European equities bounced back
from oversold technical levels on Thursday after a sharp
two-week drop, with reassuring earnings from major companies
Alcatel-Lucent and AkzoNobel boosting their shares.
Charts the euro zone's blue-chip Euro STOXX 50 index
rebounded after its 9-day relative strength index
(RSI) slipped to 26 in the previous session. A level below 30 is
considered "oversold" and often attracts buyers.
The index was up 1.2 percent at 2,998.21 points by 1132 GMT,
while the pan-European FTSEurofirst 300 index rose 1.1 percent
to 1,285.91 points after its RSI fell to 27 on Wednesday.
"It's very likely to see a short-term stabilisation in the
market as we have seen an 'oversold' situation and the Euro
STOXX 50 index is nearing some important support zones,"
Thorsten Grisse, technical strategist at Commerzbank, said.
"It does not mean that the recent consolidation process is
over, but from a medium-term perspective, we are still in a fine
Buying was supported by data from the fourth-quarter
earnings season, which has gathered pace in Europe.
Alcatel-Lucent surged 11.5 percent in heavy
volumes after the telecom gear maker posted forecast-beating
gross margins and operating profit, prompting hedge fund short
sellers to unwind negative bets on the stock.
According to data from Markit, about 9 percent of Alcatel's
shares are out on loan, up from 6.3 percent in mid-December,
making it the most shorted stock on France's CAC 40.
Short selling involves selling borrowed shares in the
expectation of being able to buy them back more cheaply later.
AkzoNobel rose 7.3 percent, the second-biggest
gainer on the FTSEurofirst 300 as the Dutch paints and
chemicals firm reported higher-than-expected earnings and hoped
to meet its 2015 targets.
Trading volumes of Alcatel-Lucent and AkzoNobel were 185
percent and 202 percent of their 90-day daily average, against
44 percent for the FTSEurofirst 300.
Some companies disappointed on the earnings front, with
drugmaker AstraZeneca falling 2.3 percent after saying
it expects earnings to continue to fall in 2014.
"The earnings season has been mixed. Possibly we will some
easing of the downward revisions to 2014 earnings estimates, but
we have to be aware that a double-digit earnings growth this
year is a little bit ambitious," said Gerhard Schwarz, head of
equity strategy at Baader Bank.
"We have seen a hefty decline (in European shares), but
overall we should not be too much worried because the
fundamentals of the market have not changed much."
Investors awaited a European Central Bank meeting for the
market's near-term direction.
Following a recent surprise fall in inflation, pressure has
risen on the ECB to ward off the risk of the euro zone slipping
into deflation. The Bank of England kept rates unchanged at its
Europe bourses in 2014:
Asset performance in 2014:
Today's European research round-up