* FTSEurofirst 300 index gains 0.8 percent
* Corporate newsflow helps market
* Barclays, L'Oreal shares fall sharply
By Atul Prakash
LONDON, Feb 11 European shares reached a
two-week high on Tuesday as encouraging results from companies
like BMW and Hexagon boosted optimism ahead of remarks by the
new head of the U.S. Federal Reserve that are expected to be
Measurement technology group Hexagon rose 6.7
percent to the top of the pan-European FTSEurofirst 300 index
. Hexagon posted fourth-quarter sales and operating
profit in line with expectations and said its sales should grow
at least 5 percent in 2014.
Luxury carmaker BMW gained 1.8 percent on record
vehicle sales in January. Competing automaker Daimler
advanced 2.7 percent after Societe Generale raised its target
price for the stock, helping the European auto index to
rise 1.9 percent.
"The market is supported by some positive corporate news,"
said Daniel McCormack, a strategist with Macquarie. "Equities
will further react positively if we get some more positive news
on earnings, which has been disappointing."
At 1223 GMT, the FTSEurofirst 300 index was up 0.8
percent to 1,310.92 points. It had climbed to its highest since
late January in a fifth straight session of gains.
Equities may get more help from Janet Yellen, who will
testify to the U.S. Congress for the first time as chair of the
Fed. Her testimony is expected to be dovish.
UK retailers gained ground after a survey showed British
retail sales rebounded in January from a weak December to record
their strongest annual growth since April 2011.
Debenhams, Kingfisher, Home
Retail and Marks & Spencer added 2.5 to 3.6
However, some analysts remained sceptical about whether the
market rally could be sustained.
"On a stock level, good announcements from corporates will
clearly be received well, but short-term fears over emerging
markets are weighing on general investor sentiment at the moment
and may well be prompting a bit of profit-taking on any gains,"
Oliver Wallin, investment director at Octopus Investments, said.
"We've been looking to buy on any dips as our base case for
2014 remains positive, but an apparent reticence from investors
to do the same has prompted us to hold back in recent weeks."
On the downside, some European retailers suffered. Metro
fell 3.2 percent after reining in full-year profit
expectations when its first-quarter earnings dipped.
Barclays dropped 5.6 percent, the top loser on the
FTSEurofirst 300. Investors wondered whether the bank can get
return on equity above 11.5 percent by 2016, a target set by
Chief Executive Anthony Jenkins. Analysts said cutting costs
looked more challenging than expected after Barclays said it
would axe up to 12,000 jobs this year.
L'Oreal lost 3.2 percent. It had hit an
eight-month high after underlying sales growth improved more
than expected in the fourth quarter and the company announced it
would buy 8 percent of its capital for 6.5 billion euros ($9
billion) from Swiss consumer goods group Nestle.
Traders said there was some disappointment about the boost to
earnings from the buyback. .
Europe bourses in 2014:
Asset performance in 2014:
Today's European research round-up