* Key index hits 6-year high, lifted by company updates
* Broad share market rally eclipses Ukraine tensions
* Euro hits one-month low vs dollar on ECB outlook
(Adds German data, fresh comments, detail)
By Emelia Sithole-Matarise
LONDON, May 13 European shares rallied on
Tuesday with a key index hitting a six-year high as upbeat
corporate results and prospects of more stimulus from the
European Central Bank boosted appetite for riskier assets.
Sentiment was supported by a media report saying Germany's
central bank would back an ECB rate cut, if needed, to shore up
the region's economy, extending euro losses against the dollar.
The report followed a survey showing a sharp decline in
investor morale in Europe's biggest economy, bolstering bets the
ECB will ease monetary policy further next month.
U.S. stock index futures held steady a day after the Dow
and the S&P 500 closed at record peaks. The rally
was led by a rebound in pummeled internet and biotech stocks on
strong corporate results and an improving economic outlook.
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
reported better-than-expected profits and reaffirmed its
financial goals for the year.
The pan-European FTSEurofirst 300 index rose 0.2
percent to 1,367.17 points, its highest level since May 2008,
while Britain's FTSE hit a 14-year high.
"This first-quarter earnings season reflects the recovery in
the macroeconomic landscape and, although it's moderate, the
negative currency impact seems lower than in the previous
quarter," said Joffrey Ouafqa, fund manager at Convictions AM,
"If the macro recovery is confirmed, company results and
share prices will follow. That's what the market needs at this
point because stocks are trading at fair value now."
The rebound in global shares eclipsed rising tensions in
Ukraine where pro-Russian rebels are threatening to break up the
country. Global equity markets have so far brushed off a
disputed weekend referendum in Ukraine in which pro-Moscow rebel
organizers said nearly 90 percent had voted in favour of
Asian shares rose earlier, led by a surge on Indian markets
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 euro fell to a trough of $1.3708, its lowest
since April 7, and down 0.4 percent on the day as bets
strengthened that the ECB could ease monetary policy further
A Dow Jones report, quoting unnamed sources, said the
Bundesbank was willing to back a negative rate on bank deposits
and purchases of packaged bank loans if needed to keep inflation
from staying too low.
This prompted a further lurch in the euro, which had
weakened earlier in the day to a one-month low after the German
ZEW survey fell short of expectations.
"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," said Yujiro Goto, currency
strategist at Nomura.
In Europe's debt markets, lower-rated euro zone bond yields
headed back towards record lows after a slew of bond sales met
strong demand from investors anticipating ECB action.
Spain's first-ever inflation-linked bond drew bids of more
than 20 billion euros while Italy reached the top of its target
range, selling 7.25 billion euros of debt, including 33-year
paper. Spanish, Irish and Italian yields traded near record lows
they reached last week.
(Additional reporting by Blaise Robinson and Anirban Nag;
Editing by John Stonestreet)