* FTSEurofirst 300 up 1.0 percent
* Shell pares losses; sees no oil leaks from GoM wells
* Nokia extends Wednesday's slide in heavy volume
By Tricia Wright
LONDON, April 12 European shares enjoyed a
late-session rally on Thursday, with mining stocks propelling
the index to a one-week closing high on trader talk that Chinese
growth data could come in better than expected on Friday.
The FTSEurofirst 300 index ended up 10.39 points,
or 1.0 percent, at 1,044.19, within a whisker of its session
peak, in a day which saw it dip as low as 1,028.16.
Traders blamed a patchy Italian bond auction for keeping
trade choppy for a large part of the day. Italy's 4.88 billion
euro sale produced mixed results, but some had anticipated a
The STOXX Europe 600 Basic Resources index bounced 3
percent higher on Thursday, having suffered an 8.2 percent drop
"There is chat going around re: China GDP numbers tomorrow
... rumour 9.00 percent vs 8.40 percent forecast," a trader
Analysts polled by Reuters expected first-quarter growth of
8.3 percent from the same period a year earlier. On a quarterly
basis, growth is expected to slow to 1.6 percent from 2.0
percent in the fourth quarter last year.
Some traders, however, reckoned the buoyant mood, darkened
in recent days by fears that China's economy could be heading
for a hard landing following robust inflation figures, could
"You almost feel that maybe it's a little bit of short
covering on the rumour rather than an actual turnaround of the
market. Lots of question marks around it really," a London-based
Energy stocks staged a recovery, having been dragged
down earlier in the session by Royal Dutch Shell on
worries about a possible oil spill in the Gulf of Mexico.
Investors' nerves appeared to be calmed by a statement from
Shell indicating a sheen discovered in the water near its
offshore Gulf of Mexico oil wells was estimated to total about
six barrels of oil, and its facilities showed no signs of leaks.
Shell, which slid as much as 5 percent earlier in the day
amid heightened sensitivities given the location of the sheen,
ended the session just 0.8 percent weaker.
Nokia was the standout faller across Europe, off
7.2 percent, extending losses from the previous session when the
Finnish phonemaker warned its phone business would post losses
in the first half of this year.
Thursday's weakness, in robust trade with volumes at three
times the 90-day daily average, came as brokers and banks cut
targets and estimates for the firm.
"The second quarter guidance was a big disappointment
considering market expectations," said Pohjola Bank analyst
However, providing investors with reason for optimism,
earnings momentum, or the pace of downgrades - in the past a
good indicator of changes in the equity market direction - is
starting to slow.
"We are through the worst in the earnings downgrade cycle
now, and I think that makes people a bit more confident in the
valuation story," Robert Parkes, equity strategist at HSBC,
"The market does tend to perform pretty well when we start
to see net upgrades coming through ... We see modest earnings
growth in Europe - in the 0-5 percent range this year."
The revisions ratio on MSCI Europe is now slightly positive,
showing there have been more analyst earnings upgrades than
downgrades for the first time since March last year, according
to Thomson Reuters I/B/E/S data.
Earnings momentum, however, does have a strong correlation
with PMI data, which was weaker last month.