* FTSEurofirst 300 index rises 0.6 percent
* GKN, Next, Orange advance after earnings reports
* Caution on concerns of more sanctions against Russia
By Atul Prakash
LONDON, July 29 European equities climbed higher
on Tuesday, with strong earnings reports from companies such as
engineer GKN and retailer Next outpacing the threat to the
region's economy from further sanctions against Russia.
GKN surged 8.2 percent after its car parts supply
division boosted first-half profits, while clothing retailer
Next gained 2.8 percent after raising its guidance for
annual sales and profit. Telecom firm Orange was up
2.4 percent after results.
"Markets are receiving a bid from better-than-expected
earnings. It's understandable why markets remain buoyant even
with current geopolitical risks," Michael Jarman, head of equity
strategy at H2O Markets, said.
"However I believe that markets are trading at fair value
and I see upside stock market returns as limited ... so
protecting your portfolio is something that investors should
start to consider."
The FTSEurofirst 300 index of top European shares
was up 0.6 percent at 1,377.67 points by 1424 GMT, helped by
positive earnings reports.
According to Thomson Reuters StarMine data, 32 percent of
companies in the STOXX Europe 600 index have reported
second-quarter results so far, of which 60 percent have met or
beaten analysts' earnings expectations.
Generally, about 48 percent companies beat analysts'
earnings per share estimates in a quarter. The second quarter
earnings are expected to grow by 14.2 percent from the
corresponding period last year.
"Going forward, the earnings season should be decent and I
expect more surprises on the upside than on the downside. The
economy generally appears to be a lot stronger," Peter Dixon,
equity strategist at Commerzbank, said.
The market also got some support in later trading after data
showed U.S. consumer confidence jumped in July to a monthly high
not seen since October 2007.
However, investors were cautious on the risk of more
sanctions against Russia.
Oil major BP fell 1.7 percent despite posting a 34
percent increase in its profit. BP said more sanctions "could
have a material adverse impact" on its joint venture in Russia.
"Politicians are under increased pressure to implement much
more aggressive sanctions, which not only run the risk of
retaliation from Russia but also might hurt the European economy
itself," Markus Huber, sales trader at Peregrine & Black, said.
U.S. and European leaders have agreed to impose wider
sanctions on Russia's financial, defence and energy sectors as
Ukraine said its forces advanced towards the crash site of
Malaysian flight MH17.
On the downside, Belgian insurer Ageas slumped 10
percent after a Dutch court said that financial group Fortis,
which was carved up in 2008 and superseded by Ageas, misled
shareholders in the run-up to its bailout.
Portugal's troubled bank Banco Espirito Santo fell
9.2 percent. A Luxembourg court accepted requests for creditor
protection filed by Espirito Santo Financial Group, which is the
largest shareholder in Banco Espirito Santo.
Carmaker Renault fell 4 percent as its sales and
cash flow suffered ahead of the replacement of key models, while
Deutsche Bank was up just 0.3 percent after reporting
a 16 percent rise in quarterly pre-tax income.
The spectre of costly litigation and settlements cast a
shadow over Deutsche Bank's results, with the bank topping up
reserves for future litigation by 22 percent to 2.2 billion
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 Alistair Smout; Editing by Jeremy