* FTSEurofirst 300 ends up 0.6 pct at 1,346.97 points
* DAX outperforms as European equities extend rebound
* Fall in Fiat weighs on Italy's FTSE MIB
* Moller-Maersk advances after bullish results and buyback
* Lack of buyback weighs on BHP Billiton
By Sudip Kar-Gupta
LONDON, Aug 19 European shares extended the
previous session's rally on Tuesday, with Germany's DAX
index outperforming, driven by what traders saw as an easing of
the Ukraine crisis.
Italy's FTSE MIB equity index proved a drag,
closing flat as carmaker Fiat retreated 2.9 percent
after Credit Suisse started its coverage of the stock with an
European stock markets had rebounded sharply on Monday after
Russia's Foreign Ministry said some progress had been achieved
during talks between Russia, Germany, France and Ukraine over
Although the situation remained fragile - with Ukrainian
government forces reporting new advances against pro-Russian
separatists - traders took consolation from the fact that the
situation had not worsened materially, in their eyes.
"The Ukraine situation is dragging on, which is a bit of a
concern, but on an underlying basis, the stock markets look
okay. People still want to be in the markets rather than out,"
said McLaren Securities' managing director Terry Torrison.
The pan-European FTSEurofirst 300 index, which is
down nearly 4 percent since mid-June, closed up by 0.6 percent
at 1,346.97 points.
The DAX rose 1 percent to 9,334.28 points. The index has
advanced by nearly 4 percent in the past 10 days but is still
down by some 7 percent from its peak of 10,050.98 points set in
Torrison said the DAX might rise to 9,500 points by the end
of August, if the Ukraine situation did not worsen.
The German equity market's recent underperformance has
dragged the average price-to-earnings (P/E) ratio of domestic
shares down to a level not seen since October 2013, according to
data from Thomson Reuters Datastream.
The MSCI Germany index trades at 12 times
expected earnings while the MSCI Europe trades
at 13.6 times earnings, making Germany's P/E ratio relative to
Europe the cheapest in nearly 10 years. By comparison, Wall
Street's S&P 500 trades at about 15 times expected
BUYBACKS IN FOCUS
Among standouts, shares in Moller-Maersk surged
4.9 percent after the Danish shipping and oil group posted
better-than-expected results, raised its full-year profit
outlook and disclosed a $1 billion share buyback plan.
However, mining company BHP Billiton fell 4.9
percent. Its results missed earnings forecasts and it held off
announcing a buyback but said it would spin off some assets.
As Europe's earnings season draws to an end, about 52
percent of companies listed on the pan-European STOXX 600 index
companies have met or beaten earnings forecasts,
according to Thomson Reuters StarMine data.
Psigma Investment Management chief investment officer Tom
Becket said further signs of improving corporate profits were
needed to prop up European stock markets.
"Markets have recovered their poise over the last week but,
with European equities having gained strongly in the last two
years, obvious value is hard to find without the justification
of increasing profits," he said.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Additional reporting by Blaise Robinson; Editing by Louise