4 Min Read
* FTSEurofirst 300 flat, Euro STOXX 50 down 0.2 pct
* Euro STOXX 50 hits support on 50-day moving average
* Buying convertibles seen good way to avoid pull-backs
* Barclays halts sell-off sparked by U.S. dark pool lawsuit
* Reuters poll shows further equity gains expected in H2
By Blaise Robinson
PARIS, June 27 (Reuters) - European stocks were steady on Friday, halting a week-long sell-off, with Airbus rising after sources said the European plane maker is set to clinch a deal with Rolls-Royce for A330 engines.
Airbus shares were up 1.4 percent while Rolls-Royce shares were up 1.8 percent after sources told Reuters Airbus is set to upgrade its A330 with engines provided exclusively by Rolls-Royce, opening a new chapter in the fight for wide-body jet orders with Boeing's 787 Dreamliner.
At 1434 GMT, the FTSEurofirst 300 index of top European shares was flat at 1,370.21 points. The index - which has lost about 2 percent in the past five sessions, hurt by downbeat U.S. growth data as well as worries over violence in Iraq - is set to snap a 10-week long run of weekly gains, its longest winning streak since mid-2012.
The euro zone's blue-chip Euro STOXX 50 index was down 0.2 percent at 3,227.08 points, but its retreat was limited by a strong support level representing the index's 50-day moving average.
"The low-growth environment, flagged by the latest U.S. and European data, is actually not a bad thing for equities. It forces asset allocators to switch out of fixed income, where the returns are extremely low, and into more risky assets such as stocks," said David Thebault, head of quantitative sales trading at Global Equities, in Paris.
"While stock indexes look toppish in the short term, one way to play this rotation towards risk is to buy convertible bonds. It's a great hedge against a potential stock market correction in the next months, while maintaining exposure to a further leg-up in stocks in the longer term."
Around Europe, UK's FTSE 100 index was up 0.3 percent, Germany's DAX index up 0.06 percent, and France's CAC 40 down 0.2 percent.
Shares in Barclays stabilised, up 0.2 percent, following their 6.5 percent drop on Thursday after New York's attorney general filed a securities fraud lawsuit accusing it of giving an unfair edge to its U.S. high-frequency trading clients in its "dark pool" business.
Banco Espirito Santo sank 9 percent, losing ground after Luxembourg justice authorities launched an investigation into three holding companies of Portugal's Espirito Santo banking family.
Despite the market's losses in the past week, the FTSEurofirst 300 is up 4.4 percent since the start of the year, hovering below a 6-1/2 year high hit earlier this month.
A Reuters poll released on Thursday showed that investors are bullish over the outlook for European shares in the second half of the year, betting on them extending their rally, helped by the ECB's stimulus measures.
"The ample liquidity and the expectation of a pick-up in earnings is keeping bourses in green," said Philippe Uzan, chief investment officer at Edmond de Rothschild AM, which has 164 billion euros ($224 billion) under management.
"Within the equity space, we still prefer European stocks ... the slight improvement in the region's economies should boost corporate profits in the second part of the year."
According to data from Thomson Reuters Datastream, profits for European companies are expected to rise by 7.5 percent in 2014.
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 Sudip Kar-Gupta in London; Editing by Robin Pomeroy)