(Repeats to complete slugline)
* Key index hits 6-year high, lifted by company updates
* Broad share market rally eclipses Ukraine tensions
* Euro settles near one-month lows vs dollar
By Emelia Sithole-Matarise
LONDON, May 13 European shares rallied on
Tuesday with a key index hitting a six-year high as a strong
performance in U.S. equities and upbeat updates from some
blue-chip companies boosted appetite for riskier assets.
The dollar and Asian shares rose earlier after the Dow
and the S&P 500 closed at record peaks on Monday,
led by a rebound in pummeled internet and biotech stocks on the
back of strong corporate results and an improving economic
Indian markets led Asian shares higher on expectations an
election victory for the nationalist opposition BJP party,
viewed as business-friendly, would spur a revival in the
region's third biggest economy.
The run of positive corporate news continued in Europe, with
Germany's ThyssenKrupp raising its full-year earnings
outlook on Tuesday, while aerospace group Airbus Group
posted a narrower-than-expected drop in core earnings and
reaffirmed its financial goals for the year.
The pan-European FTSEurofirst 300 index rose 0.2
percent to 1,367.60 points, its highest level since May 2008.
Britain's FTSE was up 0.2 percent after briefly hitting
its highest point in roughly a year.
Sentiment was also supported by the European Central Bank's
clearest signal yet last week that it was poised to ease
monetary policy further next month to support the economic
recovery. Investors were also focused on Germany's ZEW monthly
sentiment poll for its reading of the euro zone's biggest
"We are still slightly long (stocks) going into the ZEW, as
sentiment for stocks has markedly improved over the last couple
of days," said Markus Huber, senior sales trader at Peregrine
"Expectations that the ECB will act soon in a decisive
manner to fight low inflation and the rise of the euro seem to
outweigh worries that potentially further and much harsher
economic sanctions could be imposed on Russia soon," he said.
He was referring to rising tensions between Western
countries and Russia over Ukraine. Global equity markets have so
far brushed off a weekend referendum in which pro-Moscow rebel
organizers said nearly 90 percent had voted in favour of
The rebound in global equities and a slew of euro zone debt
sales halted a recent rally in lower-rated euro zone government
German 10-year yields, the benchmark for euro
zone borrowing, were slightly up at 1.47 percent with traders
keeping a close eye on a speech later in the day by the head of
the German central bank.
Jens Weidmann is known for his hardline stance at the ECB
and any comment that differs from ECB President Mario Draghi's
guidance last week could increase uncertainty over June's
meeting, hurting peripheral bonds.
Markets showed limited reaction to industrial production and
retail sales data from China, which were roughly in line with
The dollar edged up to brush a one-week high of 102.33 yen
, helped by higher U.S. Treasury yields on investor
caution ahead of a slew of data this week that could paint a
brighter economic picture.
The euro stabilised near one-month lows against the dollar,
as the recent selloff abated before the ZEW survey, which might
show some improvement in morale in Europe's biggest economy.
Still, any rebound would probably be shortlived given the ECB
It climbed to $1.3770, away from its one-month low of
$1.3745 hit on Friday, having shed 1.2 percent since Draghi said
the bank was ready to take action next month.
"The main worry for the ECB is inflation, and if there is
any improvement in the ZEW, it will not be a game changer," said
Yujiro Goto, currency strategist at Nomura.
"We see the euro trading with a downward bias given the
market is expecting some kind of easing from the ECB next month.
It is still not clear whether it will do quantitative easing,
but a rate cut is more likely."
(Additional reporting by Francesco Canepa and Anirban Nag;
Editing by John Stonestreet)